The outgoing Bank of England governor said a government-backed digital coin would need to be “very carefully designed” if it is introduced. The bank is running a public consultation until June 12. (Reuters)
Talking point: The BoE is trying to balance multiple threats. On the one hand, there’s the risk of a privately held stablecoin like Facebook’s Libra becoming ubiquitous and undermining fiat currency. On the other, there’s the risk that a BoE-issued coin undermines commercial banks and the economy at large. As BoE deputy governor Jon Cunliffe put it, “If significant deposit balances are moved from commercial banks into CBDC, it could have implications for the balance sheets of commercial banks and … the amount of credit provided by banks to the wider economy.” The BoE is further ahead than many other countries in terms of a potential design. Canada announced it is working on a prototype as a contingency last month. Japanese politicians are still debating moving ahead.