The Bank of England might have “its own Bitcoin-style digital currency” by next year, according to the country’s legacymedia. The more than three hundred year old bank set up a research unit back in 2015 to investigate linking a state-backed crypto to sterling, and there appears to be a breakthrough.
Venezuela has its Petro. Russia is looking at a Cryptoruble. Could there be a Britcoin? A Ukoin? The Telegraph would have readers believe, yes, writes its Chief Reporter Robert Mendick. Bank of England Governor, Mark Carney, reportedly “told a Treasury Select Committee before Christmas that he had held talks with other central banks about launching digital currency,” according to Mr. Mendick.
Governor Carney, 52, is the first non-Briton to hold that position at the Bank of England. Former Governor of the Bank of Canada, he also spent over a decade at Goldman Sachs. Just days ago, Mr. Carney confirmed bitcoin is an “active area of interest” and seemed most interested in its underlying mechanism for delivery, the decentralized distributed ledger. Unconcerned about its retail potential, he told British lawmakers, “You don’t end up with those financial stability risks, you get financial stability benefits. And you save huge amounts of computational energy intensity.”
He went on to describe the Bank of England’s study of bitcoin as “pretty active in it but we’re also disciplined. If we’re going to apply something to the core of the system, it’s going to need to meet five sigma quality rating.”
Working with It
Perhaps foreshadowing The Telegraph scoop, he ended his remarks, “What I say on this topic today will be outdated six months from now because things are moving so rapidly.” Indeed, the English paper began its coverage of the topic with the opening, “The Bank of England could green light its own Bitcoin-style digital currency as early as 2018, The Telegraph can disclose.”
With meetings continuing at the beginning of the next year, he confirmed “I have participated in discussions with the major central banks on this issue” of a central bank-backed digital currency. And over the summer the Bank of England used blockchain technology as a test to see if it could be used as settlements between central banks. It was successful. “The underlying technology is actually of a fair bit of interest. We are working with it at the Bank of England,” he reportedly explained to the Treasury Select Committee.
In the Spring of last year, the Bank of England commissioned Dr. George Danezis of the University College London to devise a cryptocurrency with state-assumed backing. RS Coin was born, and it did seem to add efficiencies associated with automation as it relates to banking purposes: central banks could easily control the money supply at any given time, and could obviously determine the amount of money in circulation.
Though Mr. Carney probably believes the potential Bank of England digitaltoken would be used only between central banks, The Telegraphreports a “research unit set up by the Bank is investigating the possible introduction of a cryptocurrency linked to sterling.” It’s hard to imagine traditional retail banks allowing this to happen, as it would surely be their death. A world of frictionless, snap-of-the-fingers transacting for houses, cars, etc. is not something legacy banking could survive.
Images courtesy of Pixabay, Bank of England.
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