Bank of England Open to Central Bank Digital Currency
Bank of England Governor Mark Carney revealed that he is ‘open-minded’ about releasing a potential central bank digital currency (CBDC).
Speaking at a conference dedicated to the 350th anniversary of Sweden’s Riksbank on May 25, Bloomberg reports that while Carney is “open-minded” about implementing a CBDC, he doesn’t think such a development is “imminent” because cryptocurrencies “currently don’t perform the role of money.”
Carney believes that the “primary role” of central banks is to help “maintain trust in money” and “holding on to the public confidence.” He did not reveal whether he believed that a CBDC would contribute to that mission.
The Bank of England released a working paper on May 18 exploring the implications of the potential adoption of a CBDC. Although the report found no reason to believe that adopting a CBDC would negatively impact private credit or total liquidity provision to the economy in the scenarios studied, it stated that “the Bank of England does not currently plan to issue CBDC.”
Many other central banks and government across the world are experimenting with or studying the idea of issuing a state-backed cryptocurrency or CBDC. Venezuela became the first country to officially issue a state-backed cryptocurrency when it launched the Petro in February 2018. The Marshall Islands have also announced plans to launch a state-sponsored cryptocurrency by the end of the year.
Norway’s Norges Bank and Sweden’s Riksbank, central banks in countries experiencing a significant decline in cash usage, have both recently issued working papers on releasing a CBDC. The government of Switzerland, one of Europe’s most crypto-friendly countries, has also called for a government study into issuing a CBDC.