The Bank of England would be studying the possibility of issuing its own cryptocurrency in the coming years. This hypothesis is confirmed by Governor Andrew Bailey.
He said so during a webinar with some students:
“We are looking at the question of, should we create a Bank of England digital currency. We’ll go on looking at it, as it does have huge implications on the nature of payments and society”.
This is what Bloomberg reports.
The governor would have added:
“I think in a few years time, we will be heading toward some sort of digital currency”.
Bank of England competing in the state cryptocurrency race
The Bank of England is the central bank of the United Kingdom. It is currently facing the crisis from Covid-19 with an extension of the quantitative easing plan amounting to £100 billion.
The aim is not only to mitigate post-pandemic economic shocks but also post-Brexit ones. In fact, the transition period will end in December 2020.
The issuance of a CBDC (Central Bank Digital Currency) could be part of these stimuli for the economy that has been put to the test by the Coronavirus and the farewell to the European Union.
It is clear that in this race the Bank of England risks falling behind. In fact, China is already on the finishing line, seeing that its digital Yuan would be in the testing phase.
The United States would also be working on a digital dollar. Canada is no less.
The issue is no longer taboo even for the European Union, where the ECB has formally declared that it wants to be ready.
The evolution of payments
A CBDC will be a virtual currency that will be based on a blockchain infrastructure but will be under the control of the Central Bank of the country that will issue it. In practice, it will simply be cash in digital form instead of paper.
The CBDC race has been somewhat accelerated by Facebook’s Libra project, but also by the need to improve payment systems following the digital evolution.
However, it poses at least two major problems, namely privacy and transaction security.
If these two issues were to be resolved, it is not excluded that the Central Bank Digital Currency could find an open path.