We all know that central banks from across the world are exploring the possibility of having a CBDC. And now, the statements from the Bank of England suggest that they believe that CBDCs are the future of money. As the crypto space is expanding, it is obvious that something official will also arrive that people can invest in. The governor of the Bank of England, Andrew Bailey, said programmable money is being used in the crypto world and he expects something similar in the functionality of money driven by tech.
Bank of England on CBDCs
They are planning to bring a digital pound that will be used by the citizens for retail payments. It might also be used to disburse payrolls, pensions, and other government money. So, it is clear that they are looking to expand the use cases of digital currency. In fact, the officials also noted the huge decline in the usage of cash in the UK. And while this decline was gradual, the COVID-19 pandemic has just sped things up really fast. To be precise, almost 30% of the total transactions happening in the country are now via e-commerce.
The scope of CBDCs
At present, the crypto market cap is almost at $3T, which is huge. In this, 95% consist of cryptocurrencies or tokens, and the remaining 5% are stablecoins that might be termed as the fiat of crypto. Considering such a huge market, the Bank of England officials estimate an easy 20% inflow into CBDCs from every household’s total income. This money will flow out of the banks into this new technology that can usher a lot of benefits on investors.
I am not 100% sure, but the introduction of CBDCs could also kill the need for stablecoins. Since a lot of money is in crypto right now, it can cause financial instability. This is because banks might not be able to operate properly if all money moves out from their treasury to crypto exchanges and cold storage.
What are your thoughts as the Bank of England says that CBDCs are the future of money? And do you think that CBDCs could potentially replace stablecoins in the future? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.