'Crucial' for Central Banks to Consider Digital Currencies: Bank of England Exec

Governments need to research digital currencies so they can strike a balance with private issuers, said the BoE's chief cashier.

AccessTimeIconFeb 24, 2020 at 11:50 a.m. UTC
Updated Sep 13, 2021 at 12:20 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The Bank of England's (BoE) chief cashier, Sarah John, said it is "crucial" central banks research digital currencies so they can strike a balance with private issuers.

John said it was "really important" BoE and other central banks considered whether digital currencies could form the basis of a new payment system and, if so, "quicken the pace" on determining how to regulate the new asset class.

The BoE needs to consider its position on the technology to ensure the U.K. has "a broad range of payments that it can use with confidence," John said, as reported by the Daily Telegraph on Saturday. “It is absolutely right that central banks think about whether a public sector or private sector would be best to provide a digital currency going forward.”

John, who as the BoE's chief cashier is responsible for issuing banknotes in the U.K., said it was "so crucial" that central banks also determine how to define the role of private companies issuing their own cryptocurrencies in future, such as Facebook's involvement with the Libra project.

The BoE was one of seven financial institutions that co-founded a new working group in January with the aim of sharing research and findings into central bank digital currencies (CBDCs).

Other working group members include Sweden's Riksbank, which announced Friday it would soon pilot a new e-krona initiative, expected to run until 2021, that would increase the bank's knowledge of CBDCs by testing the digital currency in a series of scenarios and stress-tests.

Sources have also told the Japan Times that the Bank of Japan (BoJ) – another member of the working group – has had several meetings with the Finance Ministry and Financial Services Agency (FSA) to discuss potential economic effects of digital currencies as well as move forward on collaborative research.

BOJ Governor Haruhiko Kuroda said: “We are advancing research and study from the technical and legal perspectives so that we will be able to move in an appropriate way when there is a growing need.”

Japanese politicians had expressed concern digital currencies, such as the one being developed by China, could seriously challenge the existing dollar-based economic order. Although there were no plans to launch a digital currency, the BoJ deputy governor said in January the bank was laying the groundwork by researching the technology.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.