Cryptocurrencies could solve central banks’ interest rate problems in 2020

Bloomberg recently published a detailed article on possible strategies for central banks in 2020. The report addresses many issues, including some probabilities, some optimistic, some worrying.

2020 will be an important year for Bitcoin and the cryptocurrency market – should central banks make more efforts to work with the market?

As 2019 comes to an end and we are heading into the next decade, many in the cryptocurrency market are excited about Bitcoin’s future prospects and point to developments such as halving as strong growth indicators. 2020 will be a big year for the market for various other reasons.

Several pilot projects are planned. While the market has seen several of them, and some of them less related to cryptography and more related to the technology itself, these are exciting developments for a market that is about to get commercial applications.

Investments in space and the discovery of blockchain-based solutions have also grown steadily, and several financial companies have warmed to cryptocurrencies.

Perhaps the biggest indicator of growth is the growing interest of central banks to work with blockchain-based currencies or digital currencies.
Central banks, cryptocurrencies and old economies

In recent weeks, it has become known that some central banks have been developing their own cryptocurrencies. Sweden’s central bank has decided to launch its own e-krona, while China has just announced the testing of its CBDC e-yuan early next year.

Certainly, new technologies are being adopted in part – but for the most part, the new currencies appear to be rooted in older economic models. And not in the decentralized way known to us.

Bloomberg’s story is a guide to what the world’s major central banks would do in 2020. The report looks at how the mostly low interest rates that apply across the board could pose a serious threat to the global economy.

In fact, negative interest rates and quantitative easing are exactly why cryptocurrency proponents are referring to digital currencies.
Negative interest rates and quantitative easing

Two key factors that worry investors and experts are the trends of negative interest rates and quantitative easing. Negative interest rates implemented by a German bank earlier this year even cost the account holder money to keep money. Quantitative easing simply means that more money is put directly into the economy.

These factors have caused investors to worry about the stability of the global economy – and then they resort to the cryptocurrency market as a hedge against traditional markets.