Can CBDCs and Bitcoin ever coexist?
The Bank of England’s CBDC lead Katie Fortune thinks so.
Asked during a panel at the Citi Digital Money Symposium about how potential state-issued central bank digital currencies CBDCs would coexist with Bitcoin or asset-backed stablecoins, Fortune said that the BoE sees a mixed ecosystem of different forms of money, somewhat similar to what is there 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 the pound.
“What you have today is, I have a Santander account, I can go to a cash machine and take out the same cash my friend with a Barclays account takes out,” said Fortune, comparing the current financial system with what could be via the introduction of a CBDC.
“I think that could be really powerful in a world of stablecoins and other digital forms of money to have a central bank digital currency that can be a bridging asset between all these different forms of money,” she said.
Fortune argued that a bridge asset like this, it could also “ensure that you don’t end up with sort of separate ecosystems” and help set standards, which, in turn, would help boost innovation.
“Actually, you see it in all sorts of industries: if you can start with a set of standards, that allows plenty of private innovation that can then interoperate with each other. And I think that is a big potential for stablecoins and CBDCs to have the next economy,” she said. “Money should be the same as when I go to turn the light switch on: I don’t think about electricity, but the fact we’re all receiving the same electricity matters a lot.”
The BoE exec insists this uniformity “is just a social good” and not “sort of a government control issue,” suggesting that it’s similar to the services and infrastructure that authorities already provide “that allows others to do what they need to, to innovate for the future.”
Use cases for CBDCs
In recent months, the UK central bank has been pushing the idea of a digital pound, sometimes also called “Britcoin,” with some estimates projecting it could be in use by the end of 2020s.
This would, certainly, require practical use cases for CBDCs, and Fortune believes the main focus should be on retail payments and e-commerce.
“The internet wasn’t around when some of these processes started. Shops weren’t accepting digital payments, some of them are quite clunky when you look under the hood,” said Fortune.
The focus, she added, should be on having the infrastructure that allows people to build smoother processes.
“Once they’ve built smooth processes, I have no doubt they will start delivering things that we don’t even know we needed,” she said.
