Mark Carney, the Governor of the Central Bank of the UK, said that he is “open-minded” when it comes to creating a central bank digital currency. However, there are no plans to issue such a currency because cryptocurrencies still “don’t perform the role of money”, as reported by Bloomberg yesterday.
The reason behind supporting cash rather than digital cash is simple: central banks are responsible for keeping people’s “trust in money”. When it comes to cryptocurrencies, the market is still volatile and can be easily manipulated by external sources. Brexit could have negatively impacted the price of the British Pound if the Bank of England (BOE) had not “overhauled the financial system”. However, the BOE still plans to diversify itself and understands that “the future of central banking may involve fewer central bankers.”
In March 2016, the BOE announced that it was launching its own cryptocurrency “RSCoin”. It was described as a “as a “hybrid” approach between the distributed model of bitcoin and conventional centralized fiat currency.” Last year, it was reported that a research team was deployed to develop a cryptocurrency that linked to pounds sterling. However, both plans were officially dropped in January 2018 with no additional information.
Once again in March 2018, Carney gave a speech at the inaugural Scottish Economics Conference at Edinburgh University and said that while cryptocurrencies had failed so far, they still presented many applicable solutions. “[C]rypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and international sanctions,” explained Carney.
He concluded that these currencies didn’t pose any threat to the “financial stability” of the UK. But whether these new assets need to be regulated, banned or integrated is a decision authorities must make as soon as possible. Carney personally believes that regulating cryptocurrencies, and combating illegal activities, would ultimately benefit everyone.
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