Mark Carney, whose tenure as the governor of the Bank of England ends next week, said that the bank must tread carefully to avoid stability dangers if it creates a digital equivalent to its existing banknotes. Andrew Bailey will assume the role of the governor of BoE on 17th March.
“A CBDC also poses a number of opportunities.”
The governor of Bank of England, Mark Carney, said that while CBDC poses a number of opportunities, it could raise significant challenges for maintaining monetary and financial stability. He added that the central bank-backed digital currency would need to be very carefully designed if it were to be introduced.
Cash usage is falling in the UK.
The Bank of England recently released a 57-page report examining how a CBDC could be introduced to existing markets, performing as both a store of value and used in everyday transactions. According to several reports, the use of cash is on a decline in the United Kingdom as retail markets have become more reliant on electronic money held with banks and payment companies rather than banknotes issued by the BoE.
The BoE said that if significant deposit balances are moved from commercial banks into CBDC, it could have implications for the balance sheets of commercial banks and the amount of credit provided by the banks to the wider economy. But the central bank believes that these risks can be mitigated.
