The bank of England says private companies can play a role in digital currency issuance

The bank of England is open to the possibility that private cryptocurrencies could play a role in the future of currencies.

At a webinar on Tuesday, bank of England analysts working on the UK central bank’s digital currency (CBDC) programme said private companies were likely to play a bigger role in money issuance and distribution.

While the bank of England has said that bitcoin (BTC) and other similar cryptocurrencies do not meet the necessary criteria to be considered currencies, Ben Dyson, an analyst at CBDC, said: “this does not mean that someone cannot improve the technology and create something that better satisfies the quality of money.””In the last year, we’ve seen proposals from big tech companies to build payment systems and cryptographic assets that work more consistently,” he said.While they may introduce new risks to the monetary system, private money can work with any future CBDC scheme if it provides real utility.

Dyson made no mention of the libra project announced last June, but the facebook-led plan is to build a stable currency based on a basket of fiat currencies.Since its announcement, it has faced fierce opposition from regulators and politicians around the world.”If these proposals are a response to real needs, for example, certain weaknesses of the existing payment system, or certain categories of users for which the existing payment system cannot provide services, then the public sector may play a role in solving certain problems and leave it to the private sector.

The bank of England’s view of private money is in stark contrast to that of other central Banks, which have focused on Facebook’s currency initiative and beyond.

In February, federal reserve chairman Lael Brainard said the motivation for studying CBDC was to crack down on private currencies that might exist outside us regulation, such as libra.China is widely believed to have stepped up its digital renminbi programme in the face of a potential rival to Facebook.

French and German officials have also expressed opposition to libra, saying such measures may not even be legal in their jurisdictions.Only a month ago, the governor of Canada’s central bank said it would only issue CBDCS to compete with potential threats such as libra.

Before the coronavirus hit the west in late February, the world’s attention was focused on saving the world’s davos billionaires.Saving the world this year involves three things: 1. Artificial intelligence, 2. Climate change and 3. Central bank digital currency (CBDC).After the virus infection, we became aware of the danger of money, and CBDC became an even hotter topic.

While much of the discussion on social media has revolved around whether CBDC needs a blockchain, for most central Banks this is a secondary issue.As the bank of England recently highlighted in a fascinating discussion paper, designing CBDC involves making a large number of complex economic, technical and policy decisions.Among them, “who will use CBDC?”It’s the most important decision.So first we must understand what a CBDC is and how it differs from other forms of currency.

CBDC comes in two main flavors.There is wholesale CBDC, a digital currency designed for financial institutions.Then there is retail CBDC, which is designed for use by individuals, families and companies.Wholesale CBDC is more useful from the perspective of financial markets and monetary policy, while retail CBDC is more complex and interesting.It will ensure that the public continues to have access to the risk-free forms of money issued by central Banks, which may be particularly important in the future as the use of cash declines and new forms of privately issued money become more widely used in payments.

This is not the first time the bank of England has taken a more conciliatory approach to libra.In August Mark Carney, then the governor, said that while libra must be scrutinised closely, the concept of private companies issuing their own currency was “fascinating”.

But, as bank of England analysts stressed in a webinar on Tuesday, any future digital currency, including potential CBDCS, will need to adhere to strict data privacy standards.”The key for the bank of England is to make sure we set up a CBDC that, if it is, will absolutely respect people’s right to privacy,” said Tom munton, the bank’s chief financial technology officer.

Like much of Europe, the UK has adopted the general data protection regulation (GDPR), which will remain in force after the country leaves the eu.The rules essentially give users ownership of their personal data.Companies like Facebook, which have a poor record on privacy, now have to get permission from users before they can use any of their personal data.

The bank of England is likely to keep any currency issued by a centralised company such as Facebook (its reputation slipped during the Cambridge analytica scandal) to the same data privacy standards as the CBDC expected.

Every year at the world economic forum, timely and urgent issues overshadow many other topics, bringing together businessmen, government officials, development professionals, celebrities, journalists and many other davos wannabes.

This year, as last year, everyone is thinking about a guy named trump.But this is hardly surprising.

What is truly remarkable, at least for anyone who has been interested in blockchain technology since its relatively obscure origins a few years ago, is how much it has become one of the # WEF2018 superthemes.

After the price of bitcoin, ether and many other digital tokens skyrocketed last year, and after widespread media coverage of the “cryptographic craze,” everyone wondered what the fuss was about.

The curious trekked through mountains of fresh snow to the various “blockchain loungerooms” outside the main conference zone, made up of bodies such as the global business blockchain committee and consensus.

There, they gained valuable insights into how the technology works, and perhaps realized that blockchain’s commitment to decentralizing record sharing and disintermediating trust has had a broad impact on everything from payments, international development and financial markets to the Internet of things, energy, environmental management and identity.

But even as the light bulb went out in some minds, there were also strong signs before and during the world economic forum that these concepts were still not widely accepted in a wide range of financial, economic and political institutions.

Many recent examples of people from powerful economies — refuting the relevance of this technology and overemphasizing its potential — remind us that those who believe in it still have work to do to bring these influencers into their comfort zones.

The parliamentary committee had previously highlighted Facebook’s privacy records, saying it might investigate libra to see if it adequately protected the financial data of billions of users.

“CBDC must be designed to comply with these [data privacy] regulations, and at the same time, we want to make sure that CBDC users can feel secure about their payments, what data they share and on what basis and with whom,” Mr. Dyson said on Tuesday.”[CBDC] can’t be completely anonymous, but we wanted to design something that respects users’ privacy and allows people to control their data.”

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