The Bank of England (BoE), which is studying the possibility of creating a digital state currency (CBDC), has decided to organize a forum where all the major tech companies will be present, including Google, Amazon, PayPal, Oracle, IBM and Spotify.
Bank of England, a forum on digital currencies and CBDC
This announcement comes at a very important time for the crypto world and for Britain, which is grappling with the first difficulties arising from Brexit.
“The Forum will help the Bank to understand the technological challenges of designing, implementing and operating a CBDC”, the announcement reads.
The forum’s participants include prominent names from the financial and tech worlds, such as:
- Arun Kohli, COO EMEA of Morgan Stanley;
- Paul Thwaite, CEO of NatWest Group;
- Charlotte Hogg, CEO Europe of Visa;
- Jorn Lambert, Chief Digital Officer of Mastercard;
- Paul Bances, global head of blockchain and cryptocurrency development at PayPal;
- Diana Layfield, President of Partnerships EMEA for Google.
The Bank of England would like to take this opportunity to get a clearer picture on the subject, given the participation of leading figures from the worlds of finance, technology and blockchain.
This forum could represent an important turning point for the Bank of England in the creation of a digital state currency, a far cry from Bitcoin, repeatedly criticized by the governor of the British Central Bank, Andrew Bailey.
For the governor of the BoE, crypto investors must be prepared to lose everything
The Bank of England and especially its governor Bailey have always been very critical of Bitcoin and the world of cryptocurrencies.
In May, Bailey stated that cryptocurrencies had no intrinsic value:
“I’m going to say this very bluntly again, Buy them only if you’re prepared to lose all your money”.
Less caustic was his assessment of stablecoins, whose value is pegged to an underlying fiat currency such as the euro, dollar or sterling.
The eternal debate around state CBDCs
To date, some 80 banks are said to have digital state currency projects in the pipeline. China started its first test of a digital yuan months ago.
The European Union has started a study on the feasibility of a digital euro. Japan is also working on its own digital currency, while the United States does not yet think it is time to think about a digital state dollar.
All these projects are completely unrelated to Bitcoin and classic cryptocurrencies and are much more similar to stablecoins.
Indeed, according to some, including the Bank for International Settlements, CBDCs are designed to counter the excessive spread of traditional cryptocurrencies, which are considered too risky, volatile and unregulated.
According to the BoE, the excessive diffusion of cryptocurrencies on the market could also determine risk for traditional banks, with a flight of capital towards digital assets.
Banks fear the vulnerability of traditional currencies
The use of cash is decreasing in favour of electronic payments and investments in digital currencies.
Central banks, with the BoE in the lead, are reportedly very concerned that sterling transaction costs could make the currency vulnerable to stablecoins, which have much lower transaction costs.
This could undermine financial stability in Britain and the BoE’s ability to set interest rates to control inflation. The creation of a digital state currency should be the means to avoid such a scenario.
A recent survey of economists, conducted by the Chicago Booth School of Business, found that 63% of economists were absolutely convinced that the benefits of a central bank digital currency would outweigh the risks, while only 7% disagreed.