Bank of England urged to weigh the benefits of digital currencies

The Bank of England’s chief economist, Andy Haldane, has suggested that the use of digital currencies could bolster financial stability. He said this at a conference hosted by TheCityUK.

The regulator is currently weighing the possibility of lowering the policy rate into negative territory. For citizens, that would mean banks charging for deposits.

In his remarks, Haldane touched on both central bank digital currencies (CBDCs) and stablecoins. In his view, attention should be paid not only to the risks but also to the potential benefits of such assets.

“In principle, widely used digital currencies could reduce, if not completely remove, the technological constraints that force us to implement negative rates,” said the regulator’s representative.

Haldane explained that the instability of the banking system stems from lending risks. According to him, separating this activity from payments would be aided by the introduction of digital currencies.

“This would reduce the internal instability of the traditional banking model,” said the chief economist.

Seizing the Opportunities From Digital Finance Speech by Andy Haldane by ForkLog on Scribd

Earlier this year, the UK Treasury and the Bank of England will develop proposals to regulate stablecoins and study CBDCs as a supplement to cash.

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