BANKS NEED TO FIND A WAY AGAINST THE CHANGING TIDES
The Bank of England (BOE), like other central financial institutions including the US Federal Reserve and the European Central Bank, intend to investigate the development of a digital currency backed by their specific government.
A digital currency or CBDC is a form of money that only exists in digital form, that is supported by a government or central bank, and whose value is decided by the overall market such as supply and demand.
Digital currencies, especially for cross-border transactions, may provide advantages like faster transaction times and cheaper transaction costs.
Following the collapse of three important larger institutions, and the risk of Credit Suisse, the Bank of England will collaborate closely with other UK regulators to evaluate these risks as well as the overall impact of a digital currency on the UK economy.
Nonetheless, worries remain regarding the possible impact on the traditional financial system. The task committee established by the BOE will also think about the advantages and disadvantages of adopting blockchain technology to sustain a digital currency.
Both the UK government and the Financial Conduct Authority have started consultations on the usage of digital currencies in the larger economy. The Financial Conduct Authority’s consultation is now open.
