Question 2: What effect will the introduction of a CBDC have on UK banks?
Answer:
No or little effect
Confidence level:
Confident
Comment:
Outside of a financial crisis, there is limited appetite to “rock the boat” with financial innovation. This means that the role of a newly-launched central bank digital currency will, by design, likely to be limited. Radical proposals are unlikely to fly, so it is difficult to see sufficient disruption to upend 800 years of traditional banking.
Question 1: How beneficial would it be to the UK economy for the Bank of England to introduce a central bank digital currency in some form in the upcoming decade?
Answer:
Neither beneficial nor harmful
Confidence level:
Very confident
Comment:
Digital currencies will only be a sideshow in the next decade. Debit cards became available in the 1980s and 1990s, but it was not until 2018 that payments by debit card exceeded those by cash in the UK. Even if the Bank of England introduces a central bank digital currency in the next decade, it will take time before it becomes an accepted part of the financial market landscape.
Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?
Answer:
Moderately
Confidence level:
Confident
Comment:
There will be some effect as investment plans are brought forward, but there’s a feeling of “rearranging the deckchairs on the Titanic”. It may be that bringing investment forward uses up investment opportunities from the future. Summers (2017) (https://www.journals.uchicago.edu/doi/pdf/10.1086/690245) seems to be making this argument when he says “[t]o some extent, low rates work to stimulate demand by pulling investment forward. So today’s reduction in interest rates reduces tomorrow ‘s neutral rate by pulling forward investment”. It suggests that the super reduction may reduce R* in the future.
The CFM surveys informs the public about the views held by prominent economists based in Europe on important macroeconomic and public policy questions. Some surveys focus specifically on the UK economy (as the CFM is a UK research centre), but surveys can in principle focus on any macroeconomic question for any region. The surveys shed light on the extent to which there is agreement or disagreement among these experts. An important motivation for the survey is to give a more comprehensive overview of the beliefs held by economists and in particular to include the views of those economists whose opinions are not frequently heard in public debates.
Questions mainly focus on macroeconomic and public policy topics. Although there are some questions that focus specifically on the UK economy, the setup of the survey is much broader and considers questions related to other countries/regions and also considers questions not tied to a specific economy.
The surveys are done in collaboration with the Centre for Economic Policy Research (CEPR).
Monetary Policy and Inequality
Question 2: What role should inequality play in the monetary policy decisions (interest rate policy and quantitative easing)?
Question 1: How large is the impact of monetary policy on the joint distribution of income and wealth?
Central Bank Digital Currency for the UK
Question 2: What effect will the introduction of a CBDC have on UK banks?
Question 1: How beneficial would it be to the UK economy for the Bank of England to introduce a central bank digital currency in some form in the upcoming decade?
The “Spend Now, Tax Later” Budget
Question 2: To what extent will the “super deduction” aide the UK’s recovery from the Covid recession?
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