Bank of England: CBDCs “the safest type of money available”
FStech’s Future of Fintech conference on 17th June was an opportunity for Tom Mutton, Fintech Director of the Bank of England (BoE), to review the outlook for the financial institution’s own digital currency. It was an opportunity to cover the BoE’s CBDC discussion paper and its technological feasability.
The Bank of England is very bullish
At first glance, Mutton stressed the need to prepare for the launch of a British Central Bank Digital Currency (CBDC). He also did not hide his optimism for the digital currencies of central banks and did not neglect the importance of the blockchain as a decentralised ledger of accounts.
This is a first considering the BoE’s old public statements. The CTO confidently said that the CBDC digital fiat currency, a liability of the Bank of England, would be “the safest type of money available”, making a distinction between CBDCs and existing private stablecoins. This confidence is rooted in the ability to convert private money (such as a bank deposit) into public money on demand.
CBDCs: “yes” but with caution
The media have recently echoed growing concerns about Bitcoin’s energy-intensive nature. As a result, the number of skeptics of blockchain technology has increased. In an attempt to reassure, Tom Mutton ruled out the possibility of a CBDC issue by the Bank of England. He then urged his listeners to “not throw the blockchain baby out with the Bitcoin bathwater”.
The lecture also touched on responses to the CBDC discussion paper, published in 2020. These suggested the need for vigilance, mentioned by technology and fintech companies, as well as some financial institutions. He added that anyone who was still sceptical on whether a CBDC was even needed, should take a serious look at the advantages and disadvantages.
In short, the Fintech Director of the Bank of England is taking the launch of ‘Britcoin’ seriously. He seems to be bullish on the prospect of a GBP-pegged stablecoin, controlled by the BoE. However, others are demanding more guarantees before making the leap.
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