Today the Bank of England unveiled a paper on new forms of digital money, seeking feedback by September 7. The questionnaire covers both central bank digital currency (CBDC) and stablecoins, but a significant part of the accompanying paper focuses on the transition to digital currencies and how stablecoins might be regulated. It explores four ways to manage the assets that back a stablecoin. One of them is a synthetic CBDC. If the Bank of England chooses that route, then it may not issue a CBDC itself.
The paper’s focus is on retail stablecoins and a CBDC digital pound. Recently the Bank unveiled a new type of central bank account that caters to wholesale interbank settlement tokens, which have similarities to stablecoins.
Like other papers on these topics, the Bank of England recognizes that digital money, whether a CBDC or a stablecoin could enable faster, cheaper and more efficient payments, with more functionality than what’s available today.
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