Mark Carney Sees Potential Risk of CBDC on UK Monetary Governance

CBDC Could Has Potential Risk on UK Monetary Governance, Says Mark Carney

The Bank of England’s (BoE) outgoing governor has highlighted potential risks that monetary governance could face if a central bank digital currency (CBDC) is to be launched in the UK.

Mark Carney wrote in a foreword to a BoE working paper on Thursday:

“While CBDC (central bank digital currency) poses a number of opportunities, it could raise significant challenges for maintaining monetary and financial stability”.

Carney added that if the central bank went ahead with a launch a digital pound would have to be “very carefully designed”.

The comments will be among the last in Carney’s role as governor of BoE. The Canadian will leave central bank Friday for a new role as U.N. special envoy for action on climate change and climate finance. Andrew Bailey, current head of the Financial Conduct Authority, will succeed him on the BoE.

Carney has appeared relatively pro-cryptocurrency in past comments for a central banker, saying the rising value of bitcoin was no threat to financial stability. He’s also suggested that one day a digital currency could replace the US dollar as the reserve currency of the world.

Crypto Industry May Affect Bank Credit Issuance

Cryptolydian reported earlier that, Jon Cunliffe, deputy governor for financial stability at the Bank of England, warned that the advent of a crypto economy could weigh on bank credit issuance.

In his speech to London School of Economics on 28 February, the official expected that the introduction of stablecoins on social media platforms could lead to put their money into stablecoin wallets.

Cunliffe went up to add:

“Innovation and competition can lead to better, cheaper, payments services in the economy. But, the payment systems on which we depend have to be reliable and robust, prudentially and operationally.”  

“Therefore, regulation needs to keep pace with the changes in the payments landscape and the proliferation of new actors. The same risks have to be subject to the same regulation,” he said.

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