The Bank of England sees CBDCs as a revolution for the future of money
The Bank of England estimates that 20% of retail and consumer deposits could potentially move to CBDC.
At a live event on Wednesday, Bank of England Governor Andrew Bailey and Lieutenant Governor for Financial Stability Sir Jon Cunliffe answered questions from lawmakers on the Economic Affairs Committee. When asked about the growth of innovation around digital currencies in the country, Sir Cunliffe gave the following comment:
“It is quite difficult to predict how innovators will take the money and how they will actually use the money in the future. But we are starting to see programmable money being used in the world of cryptocurrencies. And I would expect to see a similar revolution in the functionality of driven money. by technology “.
The Bank of England is currently exploring options to implement a digital pound CBDC for retail payments. A task force behind the CBDC is also investigating the use of a digital pound to distribute payroll, pensions, among other options.
In backing the initiative, Sir Cunliffe cites the rapid decline in the use of cash in the UK in recent years, which was greatly accelerated by the advent of the COVID-19 pandemic which discouraged physical contact in transactions. It is estimated that 30% of transactions in the country are now carried out through electronic commerce.
When asked about the potential demand for a digital pound CBDC, Sir Cunliffe had the following to say:
“We have modeled a very cautious assumption, which is that basically 20% of deposits from household and business transactions, based on the banking system, could go from the banking system to the Central Bank’s digital money.”
However, Sir Cunliffe admitted that the current state of crypto affairs could threaten financial stability within the country. The market capitalization in cryptocurrencies has risen to $ 2.6 trillion in a very short time, with an estimated 95% of unbanked digital assets and 5% consisting of stablecoins. On the opposite side of the Atlantic, the United States has a less positive outlook, saying that regulated stablecoins designed by the private sector make CBDCs redundant.
Blockchain-bitcoin technology has a potential that is very encouraging, for a large number of users, the traditional banking system has always been two steps behind technology, now they want to make up for lost time, users who see cryptocurrencies as an alternative to fiat money, they are clear about obtaining financial freedom and becoming their own banks, in the 21st century, things are already being placed next to those who know the revolutionary technology, a little education is needed to round off the freedom financial, expected for new announcements.
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