The expected speech of Governor of The Bank of England (BoE) Mark Carney was released online on Friday as it had been cancelled before due to the deatch of Jo Cox, a Labour MP, supporting Bremain camp ahead of the UK referendum. Speech of the BoE Governor was called “central bank digital currency” and was focused on concepts of the distributed ledger technology.
BoE is just another central bank, monitoring the possibilities of taking advantage of distributed ledger technology, working with cryptocurrencies. As there is a problem with bitcoin or other cryptocurrencies, which want to set an aboslutely new financial system, distributed ledger projects are focused on lower settlement times and stronger security in traditional financial environments, what was the major part of Carney’s speech.
Carney stressed that such a transition to these new tools was unlikely to happen in the close future, calling a central bank-issued digital currency an “extreme” possibility. As a coincidence, his land of origin, Canada, has already taken different stance, developing a digital form of the Canadian dollar but based on blockchain technology.
Some statements from Carney on distributed ledger technology:
“The great promise of distributed ledgers for central banks is their potential to enhance resilience. Distributing the ledger means multiple copies of the system. It can continue to operate if parts get knocked out. That removes the single point of failure risk inherent in a centralised system.”
“If distributed ledger technology could provide a more efficient way for private sector firms to deliver payments and settle securities, why not apply it to the core of the payments system itself?” he asked.
Albeit exploring the advantages and possibilities of the distributed ledger technology, especially in relation to real-time gross settlement (RTGS) system, he remains sceptical.
In the text, Carney also pointed out that the BoE will launch its own FinTech incubator for exploration of new concepts in development such as distributed ledger technologies.
He said the organization would also work on new methods for handling non-bank payment service providers, a move that could open up doors for blockchain businesses with such business models.
But enerally, Carney added that “the prospect of a central bank digital currency for the UK [is], in my view, still some way off.”
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