Bank of England Governor advocates improving digital money
Andrew Bailey addressed several topics, among which he highlighted the consideration of cryptocurrencies as money
Bank of England Governor Andrew Bailey gave a speech on July 10, addressing various topics, from the central bank’s efforts to control inflation and maintain confidence in financial institutions, to his views on cryptocurrencies. Bailey expressed his opinion that cryptocurrencies cannot be considered as money, in contrast to his preference to improve existing digital money.
Bailey noted that recent bank failures in the United States and Switzerland highlighted challenges related to the uniqueness of money and the finality of the liquidation. According to him, both cryptocurrencies and stablecoins do not meet the basic requirements of uniqueness and settlement purpose, although he did not provide further details on the matter.
Instead of focusing on cryptocurrencies and stablecoins, Bailey proposed improving existing digital money, which is currently stored in computer systems. According to him, it is possible to convert it into a monetary unit that allows the inclusion of numerous executable actions, such as smart contracts.
In addition, he mentioned that a central bank-issued digital currency (CBDC) could be a way to improve digital money. Bailey said he sees no reason why enhanced digital money should be the preserve of central banks. However, he highlighted the clear advantages of CBDCs, especially in terms of promoting the uniqueness of money and ensuring that the public always has the option of using fully functional central bank money in their daily lives.
Although Bailey expressed his support for retail CBDCs, he had a different take on wholesale CBDCs. The Bank of England has just upgraded their real-time gross settlement system, which Bailey says puts them in a strong position to offer solutions that integrate central bank digital money into the system with tokenized transactions. This is considered the fastest and most efficient route. However, he clarified that there are no plans to create a wholesale CBDC. Bailey concluded his speech by stating that cash will continue to be an integral part of the monetary system.
K. Tovar
Source: Cointelegraph
(Reference image source: Unsplash+)
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