Bank of England Deputy Governor Gives His Two Cents on CBDCs

The deputy governor of the Bank of England, Jon Cunliffe is one of the latest people to address central-bank digital currencies and stablecoins. Cunliffe refers to digital currency as the new wave of technological development as he said that cryptocurrency adoption could pose a threat to traditional lending.

In regards to stablecoins, Cunliffe said that they are linked to bigger technology and social media platforms such as Facebook. This is evident with the Facebook announced Libra token which could see stablecoins go mainstream sooner rather than later. 

He further went on to say:

“In such a world, and depending on how and whether stablecoins were backed with other financial assets, the supply of credit to the real economy through the banking system could become weaker or indeed disappear. That would be a change with profound economic consequences.”

Furthermore, he also warned that the financial authorities are getting prepared for the implications that stablecoins would bring to the table. The deputy governor also went on to reveal that the financial stability board will come up with “regulatory recommendations with respect to stablecoins” in 2020.

As he went on to talk about the promise made by Facebooks stablecoin of banking the unbanked, Cunliffe highlighted how some proposals made by stablecoins have given an insight on some of the failures in costs of the current domestic financial system. 

He added:

“Cross border payments, retail cross-border payment systems are relatively slow, expensive and unreliable and many do not have access to them. Facebook’s Libra proposal is one high-profile example of a stablecoin proposal that claims such benefits.”

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