A form of digital currency issued by the Bank of England and its counterparts around the world could help bring cross-border payments out of the 1950s and enter the modern era, a senior bank official said.
Sir Jon Cunliffe, deputy governor for financial stability, said international payments are slow and a so-called central bank digital currency (CBDC) could help speed them up.
“Cross-border payments today are slow, unreliable and expensive. They’re stuck somewhere between the 1960s and the 1950s, I don’t know exactly where, ”he said.
Sir Jon said other new technologies could improve international payment systems as well.
“There are different parts of it. One is the correspondent banking system, which is the oldest part… which we can significantly improve without central bank digital currency, ”he told members of the Lords Economic Affairs Committee.
“A central bank digital currency used between participants could well improve this, and some of the proposals we are working with, as well as the idea of omnibus accounts, would actually allow that to happen,” he said.
“But of course a number of jurisdictions would have to agree.
“There are a number of proposals… that would improve the transition of retail payments, in particular, using existing technology. Because even if CBDCs are introduced, they’re not going to hit the world for a few years.
“I guess the answer will be a mix of upgrading some of the existing technologies, using some of the opportunities in the new technologies that have just been introduced, and developing some of the ones that are emerging here. ‘horizon, which is CBDC
“But there is a lot we can do about international payments without CBDCs. “
Sir Jon also questioned the tendency to call the system a currency, rather than just a type of digital money.