Business 29 May 2018

Gerald Fenech

Bank of England considering cryptocurrency of its own: report

Many traditional banking systems remain dead set against the concept of cryptocurrencies, but not the Bank of England.

Despite pouring cold water on the suggestion that central banks could adopt cryptocurrencies for consumer use, it appears that the Bank of England (BOE) is considering developing its own cryptocurrency, according to Bloomberg report.

At a forum in Stockholm discussing the future of central banks, BOE Governor Mark Carney said he would still consider issuing a digital currency, although it’s not an immediate concern for the central bank. He also confirmed his previous statements that cryptocurrencies have no semblance to actual money at the moment. Carney has repeatedly blasted the cryptocurrency concept and warned of the turmoil it might bring to the traditional financial system so it’s something of a surprise to hear him talking like this.

Earlier in the year, the Bank of England was adamant in stating that it would not be launching its own cryptocurrency whilst warning on the possible ramifications to the financial system as a whole. The bank was a relative pioneer in the sector having explored the concept way back in 2015, but it concluded that customers would opt for owning cryptocurrencies in favour of keeping their bank accounts, thus wreaking havoc on the traditional financial system.

The bank also expressed its concern that it would no longer have the ability to control interest rate policy to maintain financial stability if a bank-controlled cryptocurrency was introduced. Nonetheless, Carney had also noted the advantages of deploying blockchain technology for central banking, saying the technology could bring financial stability and also lessen energy consumption.

A BOE blockchain proof of concept, published in April, analyses ways that will allow customers to share information across a secure network. According to the bank, maintaining data across a network as well as user privacy were still in preliminary stages although there remained a distinct possibility that these goals could be accomplished.

The central bank also teamed up with fintech companies two years ago, as well as initiated its Fintech Accelerator programme. It has also worked with companies such as Ripple, BitSight, PwC, Enforcd and MindBridge Analytics Inc. on blockchain technology projects.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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