Scrap cash altogether, says Bank of England’s chief economist – FT.com

The Bank of England in Threadneedle Street, Lo...

The Bank of England in Threadneedle Street, London. Deutsch: Sitz der Bank von England in der Londoner Threadneedle Street. (Photo credit: Wikipedia)

According to this important article from the FT, having already cast paper notes aside in favour of plastic, the Bank of England’s chief economist has proposed getting rid of cash altogether. But the FT argues that the idea of abandoning a system that has been with us for centuries in favour of a government-backed digital currency will seem a step too far.

Source: Scrap cash altogether, says Bank of England’s chief economist – FT.com

A cashless society would have some interesting implications from crime and taxation. But ultimately if an elderly lady wants to keep her savings in cash under her matress that’s her right?

Thoughts?

Dr Alf’s Two Cents: Consumer Price Inflation May 2013 – ONS

The Bank of England in Threadneedle Street, Lo...

The Bank of England in Threadneedle Street, London. Deutsch: Sitz der Bank von England in der Londoner Threadneedle Street. (Photo credit: Wikipedia)

Fiscal policy

Fiscal policy (Photo credit: Wikipedia)

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The latest ONS report on consumer price inflation in the UK is INTERESTING READING. Check it out!

via Consumer Price Inflation, May 2013.

The most significant comment for me was:

The largest upward contributions to the change in the rate came from transport (notably air transport and motor fuels) and clothing.

It will be interesting to see whether the latest announcement will have any impact on the two important levers of economic policy, namely fiscal policy and monetary policy. I suspect that there will be little change to both. UK Chancellor, George Osborne is still locked in to his austerity policy, so no change in fiscal policy. Meanwhile, it is probably too early to expect any change in direction from the new leadership at the Bank of England as far as monetary policy is concerned.

Regular readers of this blog will know that I agree with the IMF‘s view that austerity in the UK has been too severe and the economy should be carefully reflated. In particular, I endorse the IMF’s recommendation to increase public borrowing by £10 billion this year and invest it in top-class infrastructure projects.

Any thoughts?

 

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