BoE deputy governor Sir Jon Cunliffe looked at stablecoins, CBDC, and different forms of tokenization taking hold in the modern economy in a speech on financial innovation.
Bank of England deputy governor Sir Jon Cunliffe said at the Innovative Finance Global Summit in London on April 17 about the development of tokenization. The UK’s central bank is presently exploring tokenization in bank money, non-bank money, and central bank money and the patterns tokenized assets will interact.
Stablecoins, Cunliffe told, “ offer the capability of greater efficiency and functionality in payments, ” but “ it is extremely unlikely that any of the usual offerings would meet the standards for robustness and uniformity we presently refer both to commercial bank money and to the existing payment systems. ” The central bank is planning to collaborate with the Financial Conduct Authority on regulation after the passage of the Financial Services and Markets Bill.
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Tokenized bank deposits are “ a much easier proposition than non-bank stablecoins, ” and may permit banks deposits “ to compete better with non-bank payment coins. ” Regulatory issues, similar as deposit insurance and Anti-Money Laundering measures remain, still, as deposit commemoratives would settle without the involvement of central bank money, unlike current commercial bank settlements.
A UK central bank digital currency “ is probable to be required if current trends in payments and money […] continue. ” A digital pound would play an anchoring role in the economy the way cash does now and would provide a wide range of innovators access to a platform. Machinery could be created to ensure that wholesale tokenized deals could settle in central bank money thanks to a digital pound, again adding to financial stability, Cunliffe told.
Synchronizing tokenized deals with the British central bank’s real- time payment network will similarly be potentially possible with upgrades that are currently underway, Cunliffe told. The United States Federal Reserve has newly published the creation of FedNow, a new instant payment system.
(DEREK ANDERSEN, Cointelegraph, 2023)