BoE economists find CBDC could permit helicopter money

RAF Merlin helicopter hugs valleys in the lake district

The creation of a central bank digital currency (CBDC) could alleviate some of the challenges around monetary finance, or so-called helicopter money, according to research by two Bank of England economists.

In a helicopter money policy, a central bank injects money straight into the economy, either through cash handouts or a tax cut paid for by money printing.

Under standard assumptions, a central bank that chooses to pursue such a policy will give up control over the short-term interest rate.

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