Reuters citing a working paper from China's central bank 3 April
- CBs should adopt neg rate policy during deflationary recessions
- neg int rates can be used as a conventional monetary tool to revitalise growth
- digital currency will strengthen effectiveness of neg interest rate policy
- CBs should promote digital ccy which will eventually solve the problem of higher costs of holding paper ccy compared with costs of bank depos
PBOC's head of research going against the grain somewhat on digital currencies with other CBs refusing to recognise them. Timing of talk about the value of neg rates when other CBs in potential hike mode also a little strange. It's the first time a major CB has proposed that neg rates should be used as a conventional policy tool and they cite recent lower/neg rates prevailing globally.
