In a transcript of a cancelled speech released online today, Bank of England Governor Mark Carney cited a "central bank digital currency" as a development that could result from its ongoing distributed ledger proof-of-concepts.
The remarks come as global central banks begin to experiment openly with distributed ledgers, a technology inspired by the decentralized, public ledgers used to run cryptocurrencies. But, whereas bitcoin and other cryptocurrencies perhaps sought to create wholly new financial systems, distributed ledger projects are aimed at reducing settlement times and enhancing security in traditional financial environments, a context that colored Carney’s statements.
In his remarks, Carney stressed that such a transition to these new tools was unlikely to happen in the immediate future, calling a central bank-issued digital currency an "extreme" possibility.
Carney wrote: "The great promise of distributed ledgers for central banks is their potential to enhance resilience. Distributing the ledger means multiple copies of the system. It can continue to operate if parts get knocked out. That removes the single point of failure risk inherent in a centralised system." Given this potential, he said that the Bank of England intends to continue to explore how distributed ledgers could be applied to its own infrastructure, including its own real-time gross settlement (RTGS) system.
"If distributed ledger technology could provide a more efficient way for private sector firms to deliver payments and settle securities, why not apply it to the core of the payments system itself?" he asked.
Notably, this is not the first time the bank has suggested utilizing the technology in conjunction with its RTGS system.
The real-time gross settlement system currently used by the Bank of England experienced an outage lasting approximately nine to 10 hours in 2014. The incident caused "considerable inconvenience" to those affected, according to a review by Deloitte , which indicated 51% of housing […]
