Bank of England May Be Open to Help From The Private Sector to Fill Voids In Digital Payments

The United Kingdom’s central bank, Bank of England (BoE) has revealed in a webinar this week that it is reviewing the impact of private cryptos in the future usage of money.

Bank of England specialists who are involved in the exploration of how a UK’s central bank-issued digital currency commonly referred to as CBDC would operate, has revealed that private firms may have a bigger role to play during the issuance, as well as, the distribution of the money.

Whereas BoE has already stated that Bitcoin, as well as other cryptos, do not qualify to be considered “money.” Ben Dyson, a CBDC analyst, explained that this should not be taken to mean that the technology behind these cryptocurrencies cannot be improved to meet the set criteria for money. He explained:

“We've seen proposals over the last year from large technology firms, for example, to build payments systems and crypto-assets that could function more as stable money.”

Dyson explained that private currencies can still work alongside the CBDC when a real utility is offered. He, however, cautioned that it would bring in fresh risks to the monetary system.

Without mentioning the Libra stablecoin, Dyson stated that there are proposals that are seeking fill voids in real-world issues, for instance, weaknesses within the payment systems. In this case, the public sector may have a role to play while leaving the rest to private enterprises, explained Dyson.

The stance by BoE is very divergent from various central banks across the globe which have specifically addressed Facebook's Libra project. For instance, Lael Brainard, the Fed governor, stated that the idea to explore the CBDC was necessitated by the need to counter private currencies like Libra. Similarly, it is believed that China initiated the digital yuan project to avoid competition from Facebook.

However, BoE has always insisted that digital currency projects like Libra must be subjected to strict data privacy standards and so should be the CBDC.