What Has the BOE Actually Said About Starting a Cryptocurrency?By
Governor Carney publicly highlighted risks in December
Growth of digital currencies can’t be ignored by central banks
With the amount of money pouring into bitcoin and other cryptocurrencies, the Bank of England has drawn attention with reports that it is -- or isn’t -- planning to launch its own version as soon as this year. The bank itself says it isn’t, and it may not ever have planned to.
According to the BOE website, where it outlines the research a team is doing on digital currencies, the view is set out pretty clearly. (The page was last updated three days ago.)
Addressing lawmakers in London last month, Governor Mark Carney outlined why, explaining the risks of a central bank issuing its own digital currency that would allow everyone across the country to have an account at the BOE. That, he said, creates a situation whereby in times of trouble you could have an “instantaneous run” on commercial banks as Britons switch to their BOE account for safety, with financial-stability repercussions.
He also questioned how the BOE would cope with the huge amount of deposits that would result. “Of the many talents of the Bank of England,” he said, “credit allocation for the entire economy would not be a good idea.”
Carney’s comments chime with those of the BOE’s chief cashier, Victoria Cleland, in an article published in July.
“A CBDC (Central Bank-issued Digital Currency) will create some fascinating opportunities but also poses many significant and complex questions, which must be answered before the bank can consider making a fundamental change to the nature of central bank money.”
That’s not to say the Old Lady of Threadneedle Street is closing her doors to technology. The governor said last month that the systems underlying cryptocurrencies are an “active area of interest” and work undertaken by the BOE’s FinTech accelerator shows the potential value of distributed ledger technology on a systemic, rather than a retail level.
While a BOE spokeswoman declined to comment on the latest speculation on digital currencies, she pointed Bloomberg to the website and speech by Cleland.
The overall message? Don’t expect BOEcoin anytime soon.
— With assistance by Tom Hall