CBDC Can Be “Bridging Asset” Between Bitcoin, TradFi: Bank of England
Can CBDC and Bitcoin Ever Co-Exist?
Bank of England CBDC head Katie Fortune thinks so.
Asked during a panel at the Citi Digital Money Symposium how potential government-issued digital central bank currencies CBDCs would coexist with Bitcoin or asset-backed stable coinsFortune said the BoE sees a mixed ecosystem of different forms of money, similar to what exists today with different mechanics for bank deposits and cash.
CBDCs are digital currencies issued by a country’s central bank that track the price of a fiat currency, such as the dollar or pound sterling.
“What you have today is, I have a Santander account, I can go to an ATM and withdraw the same money that my friend with a Barclays account withdraws,” Fortune said, comparing the current financial system to that which could be via the introduction of a CBDC.
“I think it can be very powerful in a world of stable coins and other digital forms of money to have a digital central bank currency that can be a bridge between all these different forms of money,” she said.
Fortune argued that a bridge asset like this can also “make sure you don’t end up with sort of separate ecosystems” and help set standards, which in turn will help boost innovation.
“Actually, you see it in all kinds of industries: If you can start with a set of standards, it allows a lot of private innovation that can then interact with each other. And I think there’s a lot of potential for stablecoins and CBDCs to have the next economy, ” she said. “Money should be the same as when I turn on the light switch: I don’t think about electricity, but the fact that we all receive the same electricity means a lot.”
The BoE chief insists that this uniformity is “just a social good” and not “some sort of government control issue”, suggesting that it is similar to the services and infrastructure that governments already provide “that allow others to do what they need to innovate for the future. “
Use cases for CBDCs
In recent months, the Bank of England has been pushing the idea of a digital pound, sometimes called “Britcoin,” with some estimates suggesting it could be in use by the late 2020s.
This will certainly require practical use cases for CBDCs, and Fortune believes the main focus should be on retail payments and e-commerce.
“The Internet didn’t exist when some of these processes started. Stores didn’t accept digital payments, some of which are pretty clunky when you look under the hood,” Fortune said.
The focus, she added, should be on having the infrastructure that allows people to build smoother processes.
“Once they build smooth processes, I have no doubt they will start delivering things we didn’t even know we needed,” she said.
