CBDCs a revolution for the future of money: BOE
24 Nov 2021
The governor of the Bank of England (BOE), Andrew Bailey and deputy governor for financial stability, Sir Jon Cunliffe talked about central bank digital currencies (CBDCs) in a live streamed event on Tuesday.
They answered questions from Economic Affairs Committee lawmakers, and when asked about digital currency innovation growth in the UK, Cunliffe commented: "It's quite difficult to predict how innovators will take money and actually use money going forward. But we are starting to see programmable money being used in the crypto world. And I would expect we would see a similar revolution in the functionality of money driven by technology."
The central bank is looking into options to introduce a digital pound CBDC for retail payment, Cointelegraph reports. In addition, a CBDC taskforce is considering the use of a digital pound for distributing payrolls and pensions.
Sir Cunliffe highlighted the declining use of cash in Britain over the past few years, which has accelerated over the pandemic. Around 30% of transactions in Britain are now carried out digitally.
Moreover, when questioned as to the possible demand of a digital pound CBDC, the deputy governor for financial stability added: "We've modelled a very prudent assumption, which is that basically 20% of [household and corporate transactional] deposits based in the banking system could move out of the banking system and into central bank digital money."
However, Sir Cunliffe added that the current state of the cryptoverse may potentially threaten financial stability in the UK. The crypto market cap soared to $2.6 trillion in a relatively short time, with a forecast 95% of digital assets unbanked, and 5% consisting of stablecoins.
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