The Bank of England's Andrew Bailey discussed plans for a digital currency.
Thomson Reuters.
The Bank of England said that if the digital pound is implemented, commercial bank deposits could fall by a fifth.
Andrew Bailey, governor of the Bank of England, was speaking to a House of Lords committee on central bank digital currencies.
Jon Cunliffe said that banks would need to adapt. They would lose a revenue stream from payments.
A digital currency issued by central banks is called aCBDC. The BoE is going to have a consultation on its own 'Britcoin'.
Commercial deposits would be reduced due to faster payments and lower transaction fees, according to the bank's representatives.
"We're seeing a rapid growth of the world of cryptocurrencies," Governor Bailey said. A central bank digital currency is a sledgehammer to crack, a nut that has refused to be cracked for a long time.
Stable coins are alternatives to Britcoin. Bailey criticized the assets for their volatility.
He put the word stable in inverted commas. Some of the stable coins are more stable than others.
Stable coins are pegged to a currency like the dollar or the pound, which gives them greater certainty. Tether, which runs the largest stable coin by market cap, has been criticized for issuing false or misleading statements about their dollar backing.
The BoE is one of the central banks that is looking into aCBDC. China has accelerated its digital yuan project to launch in time for the Beijing Winter Olympics, while the Bahamas and Nigeria have launched their own currencies.
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