Proposed digital currency poses no threat to Bank of England operations: Official

Proposed digital currency poses no threat to Bank of England operations: Official

Bank of England is considering its own digital currency to compete with cryptocurrencies

Andrew Hauser, chief market officer of the BoE, said a central bank digital currency (CBDC) would not pose too much of a challenge to the Bank of England’s operations.

The BoE will consult this year on whether it should create its own digital currency – a competitor to cryptocurrencies like bitcoin – after finance minister Rishi Sunak recommended encouraged to consider a possible ‘Britcoin’.

Hauser said a central bank digital currency would be the first new type of central bank liability in centuries, but not a digital currency that doesn’t fit the goals. BoE target.

“The dog may be old, but it can still do new tricks,” Hauser said ahead of a discussion hosted by the Federal Reserve Bank of New York.

He added: “The balance sheet review itself does not make any ‘red line’ arguments against CBDC adoption. “The use of central bank balance sheets to provide state-backed transactional money is one of our oldest functions.”

The BoE said any CBDC would not replace cash and would have the same value as British pound banknotes.

The BoE considers the pound reserves that commercial banks already hold with it as a digital currency and the official CBDC as a form of wider public access to this system, potentially reducing the role of banks in daily payments.

Western central banks’ interest in CBDCs has been fueled by the possibility that a major tech company could create its own form of payment. This could bypass the traditional banking system, creating privacy and financial stability concerns.

If a company goes this route, it will be regulated to the same standards as a bank, Hauser said.

Mr. Hauser said the current ‘stablecoin’ – a cryptocurrency pegged to a major currency or commodity – does not meet these standards.

“The holders of such coins must at least accept the possibility of finding themselves out of pocket,” said Hauser, citing the recent collapse of TerraUSD and a temporary drop in the value of the Tether used. more widely used.

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