BSV
$81.08
Vol 143.02m
5.75%
BTC
$98640
Vol 106637.48m
3.1%
BCH
$575.69
Vol 1506.91m
-1.72%
LTC
$131.56
Vol 2166.04m
1.08%
DOGE
$0.42
Vol 10123.89m
4.62%
Getting your Trinity Audio player ready...

The Bank of England (BoE) is preparing for groundbreaking innovations in finance, spearheaded by the rise of stablecoincentral bank digital currencies (CBDCs), and tokenized bank deposits.

BoE Deputy Governor Sir John Cunliffe shared the central bank’s position at the Innovative Finance Global Summit on Monday during his keynote address. Cunliffe said the central bank is currently bracing itself for the rise of tokenized bank deposits on blockchain technology, which could be the easiest to comply with banking regulations.

He notes that bank deposits are already a robust form of money in the U.K., but their tokenization could pose an array of new challenges for the financial system. The bank official remarks that using blockchain “raises questions about the operation of anti-money laundering and other regulations to prevent illicit finance.”

The emergence of stablecoins is another area that has piqued the interest of the BoE, with Cunliffe saying that they offer “greater efficiency and functionality in payments. He told conference attendees that since non-banking entities issue most stablecoins, stablecoin holders are not protected by the BoE’s Financial Services Compensation scheme.

The central bank is currently mulling whether or not it will impose limits on stablecoins and is consulting with industry stakeholders on the requirement of converting the asset class to fiat.

“It has been suggested that ensuring the uniformity (or ‘singleness’ of money) requires that all transactions between different monies settle ultimately in central bank money across the books of the central bank,” said Cunliffe. “While it is not clear to me that this should be the case, it is clearly an issue that should be considered carefully in the design of the regulatory regime.”

Cunliffe confirmed that the BoE is laying the foundations for a retail CBDC because of the immediate impact that it could have on the financial system. He added that private entities would offer wallets and other consumer payment services while the central bank would concern itself with establishing the central transfer mechanism.

Tokenization is moving at breakneck speeds

Across Europe, commercial banks are conducting blockchain experiments for the use of deposit tokens, with a recent paper from the German Banking Industry Committee (GBIC) confirming the trend. Four of Germany’s largest banks, including Unicredit and DZ bank, are participating in the experiment to extend deposit tokens to multiple tokens.

The Swiss Banking Association (SBA) and the Monetary Authority of Singapore (MAS) are also experimenting with deposit tokens designed to operate like stablecoins. CBDC developments are gathering steam as central banks race to stifle the proliferation of digital currencies in their economies.

Watch: BSV On-chain Ecosystem Development in Europe

Recommended for you

Coinbase scraps Turkey plans, wants to dump AML laws
After ceasing USDC rewards in the European Economic Area, Coinbase withdrew its Turkey licensing plans while CEO Armstrong painted some...
December 4, 2024
RBI: Blockchain, tokenized assets push lawmakers to stay alert
RBI's M. Rajeshwar Rao said that the new processes backed by AI, blockchain, and tokenized assets have pushed policymakers to...
December 4, 2024
Advertisement
Advertisement
Advertisement