Over the years, cryptocurrencies have found their presence felt across various sectors. Ranging from finance to fisheries and from logistics to automobiles - blockchain and crypto platforms have been becoming increasingly popular. Banks particularly have taken a great interest in these technologies. The Bank of England is a leading name which has had a love-hate relationship with cryptos for quite some time now. Recent statements indicate that the bank is open to the possibility of a bank-backed cryptocurrency.
The Bank of England has often commented on cryptocurrencies in the past - sometimes talking about it with great optimism and sometimes with an equal cynicism. The bank has been mulling over the possibility of creating their own regulated cryptocurrency for quite some time now - but the idea has never been officially worked upon.
Mark Carney, the Governor of the Bank of England has been known to be a crypto critic in the past - often having said that it is not an equivalent to money. However, it appears that he too is opening up to the possibilities of cryptocurrencies as an actual means of payments in the future. Speaking at the 350th anniversary of Riksbank, the Governor said that he is now open about the idea of a bank-backed cryptocurrency.
Such a cryptocurrency is basically called a CBDC (Central Bank Digital Currency) which has heavy regulations and a much stable price. A number of banks in the region are now opening up to the possibility and the Bank of England does not want to be left behind as well. Weeks ago, the Bank of England had published a research paper which highlighted the various models of issuance of these bank-backed digital currencies.
While Carney does not believe that it is possible to issue these bank backed currencies so soon - he believes that there is indeed a future for this concept and that in the years to follow, CBDCs will indeed be the norm. At the conference where Carney spoke at, marking the 350 years of Riksbank of Sweden. Riksbank is the central bank of Sweden - and the organization also working towards creating a system for introducing CBDCs in Sweden.
Banks and Cryptocurrencies: A Turbulent Relationship
Over the past few years - the relationship between banks and cryptocurrencies has been a rather turbulent one. Back when cryptocurrencies first came around - banks were outright against this idea and issued strict warnings. However, over the years as the concept caught on and millions of people across the world began to actively use and trade cryptocurrencies - banks have slowly begun to catch on.
A section of believers of the crypto-economy sees this as a danger because cryptocurrencies were created because banks were not efficient enough. With banks now legitimizing cryptocurrencies and issuing CBDCs, the ‘decentralized’ nature of the currency is at a severe risk as it will now be regulated and governed by the bank. Nevertheless - it’s a give-some take-some relationship as authorities are now opening up towards the concept of cryptocurrencies and users get to use a bank-issued digital currency.