BoE advisor: Britcoin et al competition would be ‘positive’
A Bank of England-backed digital currency competing with bank deposits would be “positive”, said Carolyn Wilkins, an external member of the Bank of England's Financial Policy Committee. Wilkins gave the keynote address during the annual meeting of the Autorité des marchés financiers.
“I think increased contestability for deposits would be positive, and the central bank digital currencies (CBDC) could be designed to avoid any instability in bank funding,” Wilkins said speaking on the BoE's potential CBDC, which earned nickname “Britcoin” by the media.
The Bank of England is one of more than 50 central banks that are researching and experimenting with their own digital version of cash.
BoE-backed currency would be “a new form of digital money issued by the BoE and for use by households and businesses for their everyday payments needs. It would exist alongside cash and bank deposits, rather than replacing them,” the central bank said. The BoE is set to launch consultation with Her Majesty Treasury on the topic next year, following formation of a task force examining the topic in April 2021.
‘No decision’ on Britcoin
“No decision has been made on whether to introduce a CBDC in the UK, which would be a major national infrastructure project,” the bank said earlier this month.
Speaking today, Wilkins said: “No decision has been taken yet in most jurisdictions, including Canada and the UK. Much of the public discourse so far has focussed on winners and losers if this were to happen.
“One particular concern is that a CBDC would compete too successfully with bank deposits, and potentially raise the cost and undermine the stability of this source of bank funding. I think increased contestability for deposits would be positive, and the CDBC could be designed to avoid any instability in bank funding.”
Wilkins said her views are “her own and do not necessarily reflect those of the Bank of England or any of its policy committees.”
Wilkins is an economist and a former Bank of Canada Deputy Governor.
The Autorité des marchés financiers is the body mandated by the Québec government to regulate Québec’s financial markets and assist consumers of financial products and services.