With Cash In Decline, Bank of England Looks Into Crypto
“It’s official”: the Bank of England joins a consortium of central banks, as it looks into the alternatives offered by digital currencies. The move comes after the Bank’s boss, Governor Mark Carney first said that he will “look into” allowing digital companies to access its payment system, in June 2019.
Since then analysts were eagerly waiting for what comes next. The British banking authorities usually like to exercise caution, but they are willing to change their ways – especially as the rest of the world goes cashless. The Guardian reports that the consortium “will pool research and experiences of the potential for a central bank digital currency (CBDC)”.
What does that mean? A Bitcoin-style digital currency, but issued by your central bank.
Is Britain late for the party? Well, it looks like they have a lot to learn from their colleagues. Sweden, and its central bank, the Sveriges Riksbank, have been looking into creating its own digital currency for some time now. It has already signed deals with the consultancy firm, Accenture to test its first pilot project, the e-krona.
The straight-talking Swedes do not beat around the bush: banknotes and coins are in terminal decline, we read on the Riksbank’s official pages. The e-krona project started as early as 2017, and it looks like it will take off the ground later this year.
Who else wants to develop their Bitcoins? While staying out of the eurozone, the Brits and the Swedes will closely cooperate with the European Central Bank (ECB). In fact, the mastermind behind the entire operation is the ECB’s former board member, Benoît Cœuré. The Frenchman is also the current head of the International Bank of Settlements (BIS) innovation hub.
Other partners include the Bank of Canada, the Bank of Japan and the Swiss National Bank. Together, they are likely to shape the way digital currencies will develop (regardless of whether CBDC becomes a currency in its own right), weighing in their resources and adding legitimacy to digital transactions in general.
The rest of the world will most certainly take note. But are we all just “reacting”?
Bitcoin, and other crypto alternatives, are increasingly taken more seriously – they are no longer the domain of geeks and currency trading aficionados.
But what has caused Carney and Co. to change their minds? The decline of cash payments has been in a steady decline for years now. The writing is on the wall and could hardly be any clearer. The answer is simple: Facebook’s plans to launch its own crypto and digital wallet, Libra.
In fact, the Bank’s initial statement closely follows Facebook’s official announcement, saying that Libra should be up and running in 2020. Whether that is actually true is a completely different matter, as recently revealed by Reuters, but there is certainly a sense of nervousness among central banks and state actors.
If Libra is a bluff put on by Facebook, are they are really capable of disrupting the industry? Well, if it is not Facebook – others are in line: Alibaba, Amazon… The list goes on. “Guv’nor” Carney should brace himself as crypto is here to stay.
