Bank of England governor Mark Carney told lawmakers last month his annual speech to the city’s financial elite will focus on what Fintech developments mean for the structure of the financial system and what officials are “doing to enable that.”
This comes a week after Central Bankers at the US Federal Reserve Annual Meeting in Washington DC discussed Blockchain technology– in particular Janet Yellen, the Chair of the Board of Governors of the Fed Reserve, urged her fellow central bankers to study new innovation in the financial industry. Notably, she mentioned bitcoin and Blockchain specifically as innovations that needed to be understood by central banks.
In April 2016 Carney told a news conference broadcast from Tokyo that the BEO did not have fundamental concerns about Fintech and members wanted to look for opportunities to apply it.
“The important thing for us as members … is to be moving in parallel with these developments and not be stifling innovation, but being able to apply them in a way that improves the resilience of the system,” Carney said.
“The central bank adoption of a crypto version of a fiat currency would be a game changer,” says Daniel Marovitz, the president of Earthport Plc, a London-based firm that’s building an alternative cross-border payments network for Bank of America Corp., the World Bank, and other global institutions. “The move would show the technology can work in the real world and not just the laboratory.”
“What the bank seems to be interested in, at least at the theoretical level, is to figure out whether it’s possible to have a central bank-controlled digital currency,” said Peter Dixon, an economist at Commerzbank AG in London. “What central banks are a bit concerned about is that technically or theoretically at least, it’s possible that they could lose some control over the monetary creation process.”
“We’ve had a digital revolution, which is changing the way in which financial services are being sold and transactions processed,” Commerzbank’s Dixon said. “That’s going to have implications for the way the Bank of England operates.”
Read Robinson’s article in full here.