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