Bank of England remains focused on blockchain after Brexit

By September 12, 2016Bitcoin Business

This story was delivered to BI Intelligence " Fintech Briefing " subscribers. To learn more and subscribe, please click here . Despite widespread economic uncertainty in recent months, the Bank of England (BofE) indicated last week that it has not been distracted from its plan to enable a "fintech transformation" of the financial services industry. The plan was first unveiled by BofE Governor Mark Carney in June , and in a speech last Thursday, chief cashier Victoria Cleland reiterated that devising a regulatory approach to fintech remains a priority for the bank. She also highlighted the bank’s continued research around central bank digital currencies ( CBDC ). A CBDC is a digital version of a national currency, which can theoretically be held in accounts owned by individuals or businesses at a central bank. Right now, only a small number of financial institutions are typically able to hold accounts at central banks, and everyone else must hold an account with one of those financial institutions. Cleland outlined two significant areas related to CBDCs that the BofE is researching: Economic implications of a CBDC — specifically the possible reduction of the availability of credit. The ability to hold money at a central bank would likely lead people to move their money out of existing deposit accounts and into central bank accounts. That’s because, unlike commercial banks, the central bank does not lend out deposits, so people might consider their deposits to be safer there. But this could lead to a reduction in deposit funding at commercial banks, which would negatively impact their ability to make loans, likely resulting in a significant reduction in the availability of credit. The risks this could pose are still being fully explored and understood, according to Cleland. Technical feasibility of using blockchain technology to create a […]

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