On Wednesday, Bank of England chief Andrew Bailey and Deputy Financial Stability Director Sir John Cunliffe answered questions from Finance Committee legislators. Asked about the growth of digital currency innovation in the country, Sir Cunliffe commented:
“It is difficult to predict how innovators will actually get hold of and spend money in the future. But we are beginning to see how programmable money is spent in the world of cryptocurrency. I predicted that we would see a similar revolution in the functionality of money-driven technology. ”
Sir John Cunliffe discusses the Convention on Biological Diversity | Source: Parliamentlive.tv
The Bank of England is currently exploring options for implementing a CBDC digital pound for retail payments. The CBDC task force is also exploring the use of the digital pound to distribute salaries, pensions and more.
In support of this initiative, Sir Cunliffe points to the rapid decline in the use of cash in the UK in recent years, which has accelerated dramatically with the outbreak of the COVID-19 pandemic, which has prevented physical contact in transactions. An estimated 30% of transactions in the country are now done through e-commerce.
Asked about the potential demand for CBD digital pounds, Sir Cunliffe said:
“We modeled a very conservative assumption that basically 20% (of deposits from companies and commercial transactions) in the banking system could move from the banking system to the central bank’s digital money.”
However, Sir Cunliffe acknowledged that the current state of cryptocurrency has the potential to threaten financial stability locally. The market value of cryptocurrencies has risen to $ 2.6 trillion in a very short time, with an estimated 95% of non-banking digital assets and 5% stable. On the other side of the Atlantic, the United States has a less positive view, saying that regulated stable coins developed by the private sector make the central bank’s digital currencies unnecessary.