Financial institutions have shown a keen interest in the concept of distributed ledger technology, and some countries have even taken the plunge of creating their own national digital currencies. While digitizing fiat currency may seem clear as day to same, it could pose a major threat to the business model of commercial banks. Bank of England is rethinking their plans with blockchain technology for the time being, as all of the risks need to be weighed carefully, especially where the central bank role is concerned
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At a time during which financial innovation will mean the demise or survival of many banks in the coming years, rushed decisions are the last thing anyone needs. Blockchain technology , which presents distributed ledgers t decentralize a lot of aspects associated with finance, is a powerful tool that can be wielded by anyone in the world. But without proper understanding of what this technology can do, there are a lot of potential doom scenarios to keep in mind.
The Bank of England is one of those financial players keeping close tabs on the progress being made regarding distributed ledger technology. But at the same time, they keep their feet planted firmly on the ground, rather than getting carried away by the concept of creating national digital currencies .
Private blockchains , which is how banks would wield distributed blockchain technology, could very well lead to competitive threats from commercial and challenger banks. After all, the funding of other banks and the supply of credit lines is handled by the central bank as well. At this time, it remains unclear what role distributed ledger technology would play in that regard, yet it could put banking […]
