BoE Governor: Tokenization of Assets can Unlock an Explosion of Liquidity


Mark Carney, the Bank of England governor stated that adoption of distributed ledger tech (DLT) initiatives will help to “unlock billions of pounds in capital and liquidity.” The governor explained that such projects will soon experience closer backing by the central bank itself.

On June 20, Carney gave a keynote speech during the Lord Mayor’s Banquet for Bankers and Merchants of the City of London where he speech majorly focused on emerging technology in the finance sector. remarks focused on the fresh forms of financial products as well as services emanating from new technologies.

The governor said that the Bank of England is in the process of opening access of its balance sheet to accommodate new payment providers. The governor explained that the move by the central bank will help to empower fresh innovations in the financial system.

Carney spoke positively about distributed ledger technology (DLT) saying that it has the capacity to change how markets operate. He said:

“Consortia, such as [Utility Settlement Coin], propose to issue digital tokens that are fully backed by central bank money, allowing instant settlement could overhaul how markets operate. This could also plug into ‘tokenized assets’ – conventional securities also represented on blockchain—and smart contracts. This can drive efficiency and resilience in operational processes and reduce counterparty risks in the system, unlocking billions of pounds in capital and liquidity that can be put to more productive uses.”

Possibility of DLT Based Companies Collaborating with BoE

The comments by the governor, albeit brief, offered a hint that in the future firms utilizing DLT could in the future use Bank of England’s services. Carney explained that Bank of England was readying itself in working closely with DLT companies to enhance service delivery and unlock liquidity in the industry.

Early this month, Fnality, the company developing Utility Settlement Coin (USC) project announced raising more than $63 million in fresh funding round, Wall Street Journal reported.

Libra Must Comply to Regulation Standards

During the event, the governor talked about Facebook’s newly launched crypto, Libra. He explained that he hopes that Libra will comply with the set regulations and standards.

ConDesk states that the Bank of England will approach Libra using an open minded approach but not using an open door approach. He explained that unlike social media where regulations and standards are being formulated after many people have already adopted the platform, the terms and conditions when it comes to innovations like Libra, will have to be set and adopted prior to any launch.

He expressed confidence that if Libra achieves its ambitions, it will be very essential in the global economy. It is on this basis that Libra has to meet the set standards to ensure prudential regulation as well consumer protection is achieved, he explained.

According to Carney, Libra must adhere to anti-money laundering as well as data protection standards. He said that he expects Libra to be pro-competitive where fresh users can easily on equal terms. What’s your take on Carney’s comments? Let us know in the comments section.

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