Bank of England explores digital currency and CBDC in new working paper

The Bank of England (BoE) has released a new discussion paper titled New Digital Forms of Money exploring digital currencies and central bank digital currencies (CBDCs).

A BoE press release says the document aims to broaden the debate around new forms of digital currency. It also contains responses to another discussion paper regarding a CBDC that was released in 2020.

Explore stablecoins and the CBDC

Specifically, the article examines the role of money in the economy and examines fundamental questions regarding various public policy objectives. It also explores five new issues related to digital currencies, all of which could have benefits and implications for the country’s economic stability.

Finally, the document indicates the need for a clear regulatory framework before allowing a stablecoin to operate in the UK.

Andrew Bailey, Governor of the BoE, said:

“We live in an increasingly digital world where the way we make payments and use money is changing rapidly. “

The prospect of stablecoins as a means of payment and the emerging CBDC proposals have generated a host of issues that central banks, governments, and society at large must carefully consider and address.

“It is essential that we ask the tough and relevant questions about the future of these new forms of digital currency. “

Governor Bailey also said that if stablecoin payments were to become mainstream, they would need the same type of regulation as those with fiat currencies.

Meanwhile, reports indicate that the BoE has taken no further decisions regarding the issuance of its own CBDC. The idea first emerged in April, when Chancellor Rishi Sunak announced the launch of an exploratory working group on the issue.

British bank crypto crackdown

As the BoE debates the future role of digital currencies, some UK institutions have toughened their stance on cryptocurrency transactions. On May 30, reports revealed that banks like Barclays and online challengers like Monzo and Starling were blocking transfers to crypto exchanges like Binance and SwissBorg.

Banks have applied this question amid fears that such transactions may make their customers vulnerable to financial crime. The British lost over £ 60million last year to social media scams. Additionally, nearly half of these scams are believed to have involved cryptocurrency.

Starling in particular was quick to announce this as a temporary measure. Reports have since indicated that his ban will end on June 23. Barclays and Monzo have yet to confirm when they will re-authorize crypto transfers.


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