The Bank of England’s deputy governor for monetary policy, Ben Broadbent believes that the issuance of digital currency by central banks will put commercial banking’s business model and practices at risk. He also stated that digital currencies (bitcoin etc.) are unlikely to replace established fiat currencies.
Bank of England (BoE) deputy governor Ben Broadbent has claimed that switching over to digital currencies or a digital version of the sterling pound will have a negative impact on banks. In his opinion, a digital version of sterling could “impair” commercial banks’ ability to make loans.
The Bank of England is one of the more prominent examples of a central bank exploring the possibility of issuing its own digital currency after keeping a close eye on the most popular digital currency of them all, bitcoin. In a nod to this, the deputy governor also revealed that officials have a “lot more thinking to do” on the very subject.
A distributed ledger technology solution will also help curb the central bank’s expenses with some $54 billion spent a year on clearing and settlement processes. The BoE is also in a consultation process to use bitcoin’s blockchain technology to revamp its 500 billion-pounds-a-day payment system.
Broadbent was speaking at the London School of Economics today, in a speech. As reported by Bloomberg , he stated: Some suggest that central banks will have to issue their own digital currency – that is, to supply central ban money more widely, via some generalized distributed ledger – to meet a ‘competitive threat’ from private-sector rivals. In stating the above, Broadbent quickly questioned such a move by central banks, raising the question of such an endeavor’s effect on commercial banks. I suspect a more important issue for central banks considering such a move will be what it might mean for […]
