Bank of England Reverses Its Course
There have been rumors regarding the Bank of England issuing its own cryptocurrency at some point in the future. In theory, it makes a lot of sense for central banks to issue their own virtual currencies, especially now that society is moving toward digital-first payments.
However, it seems the Bank of England will in fact not go ahead with its plan to issue a virtual currency after all. The news comes as a surprise to many people, considering that this currency’s launch seemed imminent about a month ago… Something changed between then and now, although no one is exactly sure what that is. For now, the institution will continue to research cryptocurrencies and their impact on the financial markets.
Its no secret that commercial banks keep little of their customers’ holdings in cash reserves. If every customer of a specific bank were to withdraw all their funds at the same time, the institution would collapse instantly. A similar incident could occur if the Bank of England were to issue its own cryptocurrency. Such chaos is the last thing the British economy needs at this moment. Furthermore, the Bank of England fears this cryptocurrency could reduce the impact of its interest rate policy. The banking system is a lot more fragile than many people think.
While these plans have been put on hold for the near future the central bank’s governor remains optimistic about such currencies. Specifically, he feels central bank cryptocurrencies offer plenty of positives. The blockchain tech underneath such currencies is the main selling point in this instance, although it can be integrated into central banks without issuing a currency.
The Bank of England still has hopes for transforming the financial sector in the upcoming years. Whether or not issuing a native cryptocurrency will ever play an important role in those plans remains to be seen.
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