England Is The Latest Nation Looking Into Releasing Their Own Digital Currency
According to a news article released by CoinTelegraph, the central bank of England is the latest central bank looking into releasing its own digital currency.
The governor of the bank, Andrew Bailey, was quoted as saying:
We’ll go on looking at it, as it does have huge implications on the nature of payments and society.
He also added:
I think in a few years time, we will be heading toward some sort of digital currency
The Bank of England already belongs to a group of five international banks including Japan, England, Canada, Sweden, Switzerland, and the European Union that have formed a group to study digital currencies.
Just over a week ago, Japan made a similar announcement that they had started experimenting with their own digital currency. This follows the April launch of Chinese's nationwide blockchain network.
The news marks the latest of a series of statements from the traditional finance industry acknowledging that the blockchain technology behind Bitcoin could give the traditional banking system a run for its money:
- In August 2019, Mark Carney, then governor of the Bank of England, said the dollar was too dominant and could be replaced by a digital currency.
- In December 2019, Robert Kaplan, the Federal Reserve Bank of Dallas President, stated "Don't rely on the dollar remaining the world's reserve currency".
- In late 2017 Christine Lagarde, former head of the International Monetary Fund, said that cryptocurrencies might give existing currencies a "run for their money".
- Deutsche Bank, the largest bank in Germany, published a paper predicting that digital currencies will replace fiat currencies by 2030.
It was only in 2017 that Jamie Dimon, CEO of JP Morgan, called Bitcoin a "fraud" and said he would fire any of his employees who were trading it. Now JP Morgan is filing for patents based on the open-source Bitcoin technology.
It's unlikely that a central bank digital currency can compete against a free-market alternative however. The idea of a sovereign digital currency seems to contradict the original purpose of cryptocurrency, which was engineered to be borderless. Interestingly, Vladmir Putin stated in 2018 that no nation can have its own crypocurrency as they are borderless by design.
Some speculate that the central banks have taken a greater interest in digital currencies since Facebook announced their intention to release a stablecoin ("Libra") backed by a basket of fiat currencies.
Some governments have already released their own digital currencies with lackluster results, including the Venezuelan Petro, which has yet to see any adoption outside of the nation-state. Most citizens are opting for public currencies such as Bitcoin or DASH when they have the choice.
Blockchain technology requires a complete paradigm shift in the way we think about money, how it is created, and how a community of people can govern it. This trend of central banks researching digital currencies is likely to continue, however how successful they will be in convincing their citizens to adopt it remains to be seen.
