Bitcoin (BTC) is getting its best “advertisement” once more as another major central bank floats the idea of charging people to save their money.
Negative rates “would drive BTC adoption”
According to the results of the meeting, the BoE will enter discussions with banking regulators over negative rates, which effectively mean lending institutions, and, hence, savers must pay to store cash.
The reason is the impact of the coronavirus lockdown on the economy, along with the looming prospect of Brexit, deal or no deal.
“The bank is leaving all options on the table, due to elevated uncertainty,” one analyst told the publication in light of the news.
The pound slid against major currencies Thursday, as policymakers further confirmed that they had voted to keep interest rates at 0.1% for the time being.
Bank of England balance sheet chart (GBP). Source: TradingEconomics/ Bank of England
Bitcoin proponents immediately seized on the BoE’s troubles, arguing that such a policy simply undermined both fiat currency’s reputation and its own position.
“Wow, the Bank of England discussing negative interest rates. If they adopt this, they would be paying you to borrow,” Tyler Winklevoss wrote on Twitter.
“You couldn’t buy a better advertisement for Bitcoin but u can take their money and go long bitcoin.”
Veteran trader Tone Vays had similar thoughts.
“I don't think any Bank would pay you to borrow but they will charge you to store/save your money at the Bank, what more can a Bitcoin Hodler as for!” he said, responding to Winklevoss.
“Thanks Bank of England, you will help drive $BTC adoption.”
The Bank, bailouts and Bitcoin
Others took aim at the interim interest rate decision.
“One of the most important prices in our society is determined by vote,” Christopher Bendiksen, head of research at digital asset investment strategist Coinshares, tweeted.
“You read that right. In 2020, 8 middle-aged men and one woman literally come together several times a year to determine the price of credit. This will seem unbelievably archaic to our descendants.”
As Cointelegraph reported, the BoE is particularly infamous in Bitcoin circles, the United Kingdom government bailing out the banking sector en masse on the eve of Bitcoin’s birth in 2009. An article from the national newspaper, The Times, was even included in the Bitcoin genesis block.
More recently, central banks’ reactions to coronavirus have fuelled the idea that Bitcoin will increasingly function as a hedge against fiat.
This week, the United States Federal Reserve fielded queries about its plans to overshoot inflation targets, a process that would weaken the U.S. dollar and provide a likely further boost to safe havens such as gold and Bitcoin.
For its part, the BoE had said that negative interest rates would be “damaging” to the U.K. economy as recently as last month.
The European Central Bank, or ECB, has administered negative rates since 2016, but such a move would be a historical first for the U.K.