Bank of England President Andrew Bailey and Vice President for Financial Stability Sir Jon Cunliffe answered questions from lawmakers on the Economic Affairs Committee at a live event on Wednesday (17).
Cryptocurrencies are gaining more and more prominence around the world, representing the true growth of innovation. When asked about the matter, Sir Cunliffe reinforced their importance for the future.
Sir Cunliffe believes it is very difficult to predict how innovators will receive money and actually use the money going forward. But he also believes that we are starting to see programmable money being used in the crypto world and that he would expect to see a similar revolution in technology-driven money functionality.
The Bank of England is currently exploring ways it can implement a CBDC (Central Bank Digital Currency) in digital pounds for use in retail payments. In addition, a task force focused on CBDCs was created to look at the potential use of a digital pound to distribute payrolls, pensions and more.
With the rapid decline in the use of the UK pound, accelerated by the COVID-19 pandemic and the discouragement of physical contact in transactions, it is estimated that 30% of transactions in the country are made via e-commerce.
When asked about the potential demand for a digital pound CBDC, Sir Cunliffe said that they still model a rather prudent assumption, with basically 20% of domestic and corporate banking-based deposits that could move out of banking into digital money. central bank.
However, due to the current state of the crypto market and its instability, it could threaten stability within the UK. Across the ocean, even, the US is not so positive about cryptocurrencies. That’s because regulated stablecoins designed by the private sector make CBDCs redundant.