Bank Of England Is Issuing Its Cryptocurrency

Bank Of England Is Issuing Its Cryptocurrency

For quite a while rumor had it that Bank of England is flirting with the idea of issuing state-sponsored cryptocurrency. Now it turns out that the rumors are actually true and England’s central bank is actually working on its own digital currency.

Bank of England’s next payment system will be based on the blockchain
Boston Fed And The Bank Of England Interested In Hyperledger Project
UK Payments System May Soon Be Blockchain Compatible

For quite a while rumor had it that Bank of England is flirting with the idea of issuing state-sponsored cryptocurrency. Now it turns out that the rumors are actually true and England’s central bank is actually working on its own digital currency.

Since 2015 a specialists teams have been studying the potential and technologies of cryptocurrencies. The bank will tie the new crypto to the pound sterling in order to bring some stability, which is unnatural to the cryptocurrencies we now have. According to Dr. Mark Carney, Governor of the Bank of England, the technology behind cryptocurrencies is interesting enough to attract the attention of financial institutions.

He also admitted that Bank of England is cooperating with other central banks. It successfully transacted money in the summer of 2017 using blockchain technology, too. Dr. Carney praised distributed ledgers for bringing financial stability and saving computational energy. The Governor and his team are striving to implement blockchain with the highest quality possible in the core system of Bank of England.

If everything goes as planned, the new cryptocurrency may be used for purchasing assets like cars or real estates. However, the central banks have carefully estimated all limitations as well as applications of digital money. One such disadvantage is solvency. Mark Carney’s concerns are that if the central bank’s currency is publicly available solvency might turn a pain point. Mainstream use may result in bank runs or if all citizens deposit their money in the central bank, it will be forced to find new ways to back them, either by buying or selling assets.

England adds to the query of countries willing to introduce their own cryptocurrencies. We already know that Israel has plans to design digital shekel in hope to fight back black market. In addition, Vladimir Putin stated that Russia is going to be the first country to issue national cryptocurrency – digital ruble. Russia’s intentions are to sidestep international sanctions. Venezuela shared their plans for state-issued currency, which also aim at circumventing sanctions from the USA. The petro, Venezuelan cryptocoin is backed by the state’s oil reserves.

Once central banks step in, the majority of the cryptocurrency community will probably criticize them. The introduction of central digital currencies will change the decentralized nature of cryptocurrencies, the one feature they are vastly praised about.

COMMENTS

WORDPRESS: 0