BoE Governor: A CBDC Would Need to Be ‘Very Carefully Designed' to Overcome Challenges

The outgoing Bank of England (UK Central Bank) governor Mark Carney has reiterated his sentiments regarding a Central Bank Digital Currency. This was after the UK Central bank released a dossier touching on the CBDC that is supposed to store value and facilitate payments for both domestic and commercial transactions.

The Outgoing Canadian is on the move as he was recently offered a lucrative U.N. special envoy on climate action and climate finance post. He is set to be replaced by Andrew Bailey who is currently serving as the head of Financial Conduct Authority. In the discussion paper, Governor Carney said,

“While CBDC (central bank digital currency) poses a number of opportunities, it could raise significant challenges for maintaining monetary and financial stability … and would need to be very carefully designed if it were to be introduced.”

Notably, a CBDC will come in handy as the use of banknotes, the most widely accepted form of currency is in decline with technological breakthroughs paving the way. However, CBDC’s will now present a unique challenge as the Central Bank has predicted that significant deposits moving to CBDC instead of the banks could skew the balance sheets for both commercial banks and the BoE.

This could affect the portion of credit that would be availed to banks, which could fundamentally change how the banks will enforce their policies.

CBDC should work alongside not replace Traditional methods

They have further insisted that the CBDC could only be implemented to supplement the current traditional deposits rather than replace them. The CBDC would be quantified equivalently to the Sterling pound.

“It would be denominated in pounds sterling, so £10 of CBDC would always be worth the same as a £10 banknote.”

Conversations around the CBDC are still ongoing as Mark Carney has explained that the paper lays the groundwork and would be an ice breaker for the CBDC dialogue in UK. They have given a 12th June deadline for those with input regarding the issue.

Collaboration with other central banks

The Bank of England has collaborated with other global central banks the Bank of Canada, the Bank of Japan, the European Central Bank, the Sveriges Riksbank (Sweden) and the Swiss National Bank to look into the feasibility of CBDC.

Get Free Email Updates!

*Action* Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

I will never give away, trade or sell your email address. You can unsubscribe at any time.

Lujan Odera
Lujan Odera
Lujan is a blockchain technology and cryptocurrency author and editor. He has worked in the field of cryptocurrencies and blockchain technology since 2015 helping him gain enough experience to be the writer he is today. He is known for his simple writing style that allows novices to understand the field in the simplest way.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

LEAVE A REPLY

Please enter your comment!
Please enter your name here

3,511FansLike
2,795FollowersFollow
4,272FollowersFollow

Live Bitcoin Price & Latest BTC Charts

Today's Latest Crypto News

BitcoinExchangeGuide is a hyper-active daily crypto news portal with care in cultivating the cryptocurrency culture with community contributors who help rewrite the bold future of blockchain finance. Subscribe on Google News, see the mission, authors, editorial links policy, investment disclaimer, privacy policy. Got News? Contact us, we are human too. Note: nothing here is financial advice, do your own research thoroughly.

Start Using Crypto Today