On Monday, the Governor of the Bank of England (BoE), Andrew Bailey, delivered a speech on the future prospects for money, diving into the potential of new forms of digital currency. Mr. Bailey wants to preserve the status quo between financial institutions and the central bank, but he also wants to encourage banks to spur greater innovation, particularly around tokenized deposits. The BoE sees a need to protect the foundations of safe money as the economy goes digital, but not only with a central bank digital currency (CBDC).
In his speech, Mr. Bailey referred to two basic foundations of money “on which the economy depends and in which the public can trust.” One is the singleness principle referring to the concept that all money has the same value. The other is settlement finality. In other words, once we pay for something, the transaction concludes.
However, the Governor believes that current tech developments threaten to put safe money at risk. He says stablecoins generally fail the basic singleness and settlement finality tests and that what we need is a new form of “enhanced digital money” able to incorporate new features, such as the pgorammability of smart contracts, while preserving its intrinsic safety and confidence. This will be particularly important in the case of a retail CBDC or digital pound.
Article continues …
Want the full story? Pro subscribers get complete articles, exclusive industry analysis, and early access to legislative updates that keep you ahead of the competition. Join the professionals who are choosing deeper insights over surface level news.
