The Bank of England (BoE), which is studying the possibility of creating a digital state currency (CBDC), has decided to hold a forum with all major technology companies, including Google, Amazon, PayPal, Oracle, IBM and Spotify.
Bank of England, Digital Currency Forum and CBDC
This announcement comes at a very important time for Britain, which is facing the first difficulties arising from Brexit.
“The forum will help the bank understand the technological challenges in designing, implementing and operating a CBDC,” the announcement said. Forum participants include prominent names from the financial and technological worlds, for example:
Arun Kohli, CEO of EMEA at Morgan Stanley; Paul Thwaite, CEO of NatWest Group; Charlotte Hogg, CEO of Europe of Visa; Jorn Lambert, Master Digital CEO, Mastercard; Paul Bances, global leader in blockchain and cryptocurrency development at PayPal; Diana Layfield, President of the EMEA Partnerships at Google.
The Bank of England would like to take this opportunity to get a clearer idea of the subject, given the participation of leading figures from the worlds of finance, technology and blockchain.
This forum could be an important turning point for the Bank of England in creating the national digital currency.
Eternal debate around state CBDCs
To date, about 80 banks are reportedly preparing to develop the CBDC. China launched its first test of the digital yuan a month ago. The European Union has launched a feasibility study on the digital euro. Japan is also working on its own digital currency, while the United States does not yet think it is time to think about the digital dollar.
All these projects are not entirely related to BTC and classical cryptocurrencies, they are much more similar to stablecoins. According to some, including the Bank for International Settlements, CBDCs are designed to combat the excessive spread of cryptocurrencies, which are considered too risky, volatile and unregulated.
According to the BoE, the excessive spread of cryptocurrencies on the market could be a risk for traditional banks with capital flight towards digital assets.
The bank fears the vulnerability of traditional currencies
Cash use is declining. The UK central bank is reportedly very concerned that transaction costs could make the currency vulnerable to stablecoins, which have much lower transaction costs.
This could jeopardize Britain’s financial stability and the BoE’s ability to set interest rates to control inflation. The creation of a digital national currency should be a means of avoiding such a scenario.
A recent survey by economists conducted by the Chicago Booth School of Business found that 63% of economists were completely convinced that the benefits of the central bank’s digital currency outweighed the risks, while only 7% disagreed.