Bank of England is 'Fine' With Co-Existence of Private Stablecoins

The CBDC bandwagon has reached the shores of the English Channel

With the United Kingdom’s central bank finally working on its Central Bank Digital Currency. 

As per the 116 pages long consultation paper released collectively by the Bank of England and the U.K. Treasury, the United Kingdom is all set to launch the Digital Pound or ‘Britcoin’. Along with the consultation paper, a technical paper is also released, deliberating over the technical design and implementation of the CBDC. 

However, unlike other countries that declared their CBDCs as an alternative to private stablecoins, the Bank of England went on for a more liberal approach and called for the coexistence of the Digital Pound with stablecoins. This positive take on stablecoin aligns perfectly with the government’s attempt to create a safe environment for blockchain innovation in the country. 

“In much the same way that cash exists alongside private money, the digital pound does not need to be a dominant form of money in order to meet its public policy objectives. The digital pound could exist alongside other forms of money, including stablecoins.”

Recently, London has been named as the most crypto-ready city for business, inviting new crypto investors to invest in the city. This indication from the central bank of the U.K. could further increase the chances of new institutional investments. 

According to the Bank of England, the user experience of their CBDC would be very much similar to that of the digital transactions of fiat. It would be optimized to be used for any kind of online transaction without cutting onto the benefits of blockchain technology. The BOE would be working towards the mass adoption of the Digital Pound by simplifying its use cases for the market. However, the paper avoided stating any date for the launch of the Digital Pound. 

Is the Co-Existence of Private Stablecoins and CBDCs Possible?

CBDCs are the future of traditional finance and economies from around the world are embracing this technology to optimize their present mechanisms. However, would stablecoin be able to survive in the presence of CBDCs? The answer lies in understanding the fact that each stablecoin comes with specific use cases and no CBDC would be completely decentralized for users. 

CBDCs are meant to reduce the friction in the settlement of fiat money in online transactions while also increasing its safety manifolds. The different use cases of CBDCs and stablecoins enable the users to adapt both and interact with the respective technology at their convenience. 

Both CBDCs and stablecoins are similar in many aspects as well. Stablecoins are algorithmically pegged with a fiat currency while CBDCs are the legal representation of the fiat itself. CBDCs, as the name suggests, are released by the central banks, however, stablecoins are usually created by private companies. 

The declaration from the Bank of England would be welcoming for new crypto projects as the phenomenon of co-existence is what cryptocurrencies need the most today. 

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