The governor of the Bank of England, Mark Carney, has not ruled out the prospect of central banks issuing digital currencies in future, despite a range of concerns about cryptocurrencies.
Speaking at a conference at the Riksbank, the Swedish central bank, last week, Carey said: “Is our role to be changing the payment systems and helping private providers of digital money, or will we go all the way to a central bank issued digital currency?
“This is one of the most exciting and important areas. And certainly the most important area to get right,” Carney said.
Carney was quick to add that a central bank issued cryptocurrency was not on the horizon and that it needed to be understood that cryptocurrencies do not perform the role of money.
Commentators have interpreted Carney’s comments in Stockholm as a significant step beyond his previous dismissal of Bitcoin as a failure.
In February he said: “It has pretty much failed thus far on the traditional aspects of money. It is not a store of value because it is all over the map. Nobody uses it as a medium of exchange.”
Like other central bankers, Carney has often referred to the fact that a significant amount of illicit activity is enabled by cryptocurrenices.
However, last month the Norwegian central bank Norges Bank issued a paper in which it considered the role that digital currency might play in the monetary system. The paper says one reason for central banks to get involved in digital currency is to “ensure confidence in money and the monetary system.”
The paper says: “A decline in cash usage has prompted us to think about whether at some future date a number of new attributes that are important for ensuring an efficient and robust payment system and confidence in the monetary system will be needed.”
Digital currency could be an alternative means to store value.
The Bank of England’s own research on the value of cryptocurrencies says: “A central bank digital currency that is a close substitute for bank deposits may strengthen the transmission of monetary policy changes to the real economy.”