Governor of Bank of England Open to the Idea of CBDC

Governor of Bank of England Open to the Idea of CBDC

Mark Carney, Governor of Bank of England, said that he is quite open-minded to prospects of a CBDC (Central Bank Digital Currency), at Riksbank’s Anniversary conference, reports Bloomberg. Riksbanken, or Sveriges Riksbank as it is officially known, is the central bank of Sweden.

Although he doesn’t ignore the prospect of a CBDC, he stressed that it’s very unlikely such adoption of a central bank digital currency would happen anytime soon. The governor stated that at present, digital currencies do not constitute money.

Just a couple of months ago, The UK central bank governor expressed his views on cryptocurrencies at an event organized by Regent’s University in London, saying that:

“It [cryptocurrency] has pretty much failed thus far on… the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange.”

In a working paper issued by the Bank of England earlier this month, the bank analyzed various scenarios where CBDCs could pose possible challenges and risks, and scenarios of financial instability that comes with use of digital currencies. The report concluded that adopting a central bank digital currency would not, in any case, impact total liquidity provision and private credit negatively.

At Riksbank’s 350th Anniversary event on May 25, Mark Carney said that the primary role of all central banks around the world is to maintain public trust in money. He explained that the past, present, and future of central banks has everything to do with public confidence in the financial system. He said that the financial system in the UK has been overhauled to keep money safe and to make the system more resilient to cliff-edge shocks like Brexit.

Many central banks across Europe have considered the idea of adopting a CBDC. A working paper was issued by the Norwegian central bank earlier this month, laying out the positives of using a CBDC to supplement cash to ensure public confidence in the financial system.

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