Bank of England Official Wants More Central Banks to Adopt Digital Currencies, Warns of Losing the Market to BigTech

Over the last year, the central banking institutions of major global economies have been seriously discussing on introducing central bank digital currencies (CBDC) in the market.

Bank of England (BoE) chief cashier Sarah John has said that she is in favor of having state-issued digital currencies. With BigTech companies looking to dominate the financial sector, Sarah said that it is “crucial” for central banks to step in.

The digital payments sector continues to evolve rapidly with the advent of blockchain and distributed ledger. Big companies are seeing a massive opportunity and growth over the next decade.

As private sector companies from the tech space are looking for a business opportunity, Sarah said that it said it “absolutely is really important central banks think about that as an option”.

She also stressed that any inaction further force central banks to take catch-up measure while losing out the game to private companies. “It is absolutely right that central banks think about whether a public sector or private sector would be best to provide a digital currency going forward,” she said.

Just a few days back, the Eu regulators also expressed concerns over the entry of BigTech in the financial markets. The European Securities and Markets Authority said: “The high level of market concentration typically observed in BigTech may get carried into financial services, with potentially adverse impacts on consumer prices and financial stability”.

Besides, the Financial Stability Board (FSB) Chair Randal Quarles recently asked all the G-20 member countries to speed up their regulatory process for virtual digital currencies. The chairperson asked the authorities to “quicken the pace of developing the necessary regulatory and supervisory responses to these new instruments.”

In his letter written to G-20 finance ministers and central bank governors, Quarles warned the regulators on the speed of innovation in the digital payments industry. He wrote: “As this sector grows and evolves, there may be new vulnerabilities that need assessment. The FSB is forming a group to consider what work is appropriate and whether to reorganize existing work on non-bank financial intermediation.”

Reciprocating to the FSB’s demands, the G-20 assured that it will take necessary steps and efforts to develop the regulatory recommendations for digital currencies. The press release by the G-20 notes that “global stablecoins [...] need to be evaluated and appropriately addressed before they commence operation”.

Besides, the G-20 has also asked the FSB to create a roadmap and enhance global cross-border payment arrangements by October 2020.