The Bank of England (BoE) is still exploring the possibility of a state-backed cryptocurrency, despite its up-and-down prospects in 2018. While not seen as a particularly overarching concern at the moment, the BoE’s Governor Mark Carney has said the issue is still up for consideration, per a Bloomberg report.
Back in January, the Bank of England established a research unit to probe the possibility of issuing a prototype cryptocurrency – a potential timetable was even floated, which could serve as a rival to both Bitcoin and Ethereum if implemented. Since then, the prospects of such an initiative have certainly cooled, though Mr. Carney has certainly left the door open to the endeavor.
This stance was echoed at a recent panel in Stockholm on the future of central banks, in which Mr. Carney also reiterated previous statements reflecting cryptocurrencies stance, namely that they are not acting as money at the present time.
Lingering concerns remain
While over three years in the making, the BoE has always treaded cautiously of a bank-issued cryptocurrency, mainly for fear of its respective impact on the domestic financial system. Indeed, such a launch would have seismic effects on the UK financial system and could place stress on existing commercial bank accounts.
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Additionally, the BoE also noted that a crypto would lead to the inability of wielding its interest rate policy as a tool to effectively maintain financial stability. Taken as a whole, the entire launch of a bank-controlled cryptocurrency was largely written off as too risky. Still, the advantages of a state-backed crypto are manifold, helping keep the idea on life support.
So you’re telling us there’s a chance?
Blockchain technology in 2018 is no longer seen as a threat to existing interfaces and infrastructures. Whereas in years past, the technology was seen as incompatible with legacy systems, 2017 has shown the banking sector and others of its relevance and compatibility.
Mr. Carney himself was aware of such advantages and benefits bestowed by the technology, including merits of deploying blockchain technology for central banking. While it’s still too early to take this as concrete assurances of its adoption at the BoE or state level, it’s worth noting that the central bank does recognize the value of blockchain.
Consequently, for the BoE, its emphasis has been on maintaining data network-wide as well as improving user privacy. Still in a preliminary stage, the adoption of blockchain technology is neither a foregone conclusion nor a non-starter, but rather somewhere in between.