Who remembers this IMF article that proposed a dual-local-currency-system (cash & e-cash) to make negative interest rates work? https://blogs.imf.org/2019/02/05/cashing-in-how-to-make-negative-interest-rates-work/ …https://twitter.com/coindesk/status/1220677815688929280 …
“When cash is available, however, cutting rates significantly into negative territory becomes impossible... instead of paying negative interest, one can simply hold cash at zero interest. Cash is a free option on zero interest, and acts as an interest rate floor.”
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“The proposal is for a central bank to divide the monetary base into two separate local currencies—cash and electronic money (e-money).”
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“E-money would be issued only electronically and would pay the policy rate of interest, and cash would have an exchange rate—the conversion rate—against e-money.”
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“This dual local currency system would allow the central bank to implement as negative an interest rate as necessary for countering a recession, without triggering any large-scale substitutions into cash.”
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