Stimulation of innovation and implementation of new use cases could be the result of CBDC implementation. According to Bank of England representatives, the central bank’s virtual currency has the right to become a bridge between Bitcoin and traditional finance. Such a narrative is news. Can it be trusted?
Bitcoin and CBDC can go hand in hand
On a panel at the Citi Digital Money Symposium, Katie Fortune, who is head of the Bank of England’s CBDC, was asked how the central bank’s virtual currency would coexist with Bitcoin and stablecoins. Fortune responded that the Bank of England sees a future ecosystem of different forms of money, similar to the current one, but with different mechanisms for bank deposits and cash.
CBDCs are digital currencies issued by central banks that track the price of a fiat currency such as the dollar or pound. Fortune compared the current financial system to one based on CBDCs, saying: “I have a Santander account and I can go to an ATM and take out the same cash that my friend with a Barclays account would take out.”
Fortune believes that central banks’ digital currencies could play a bridging role between different forms of money, such as bitcoin and stablecoins. According to her, bridging assets could also help set standards and spur innovation while preventing the development of separate ecosystems.
CBDC will spur crypto adoption
Citi analysts suggest that blockchain technology is at the intersection of billions of users and trillions of dollars in value. Their latest report, “Money, Tokens and Games: the next billion blockchain users and trillions in value,” reveals that future growth in cryptocurrency adoption will be driven primarily by central bank digital currencies (CBDCs) and the tokenization of real-world assets.
According to analysts, standards are the key to innovation in any industry. It is through them that it becomes possible to combine different initiatives, which in turn allows to achieve even greater potential. For this reason, according to Citi, CBDCs and stablecoins are capable of creating a new integrated economy that will enable the smooth flow of money.
“We should think about money in the same way we think about electricity: we all get the same energy, but we don’t think about who produces it or how, it’s simply available to everyone. The same approach should be applied to money to achieve stability and consistency in the economy.” – Fortune explained.
CBDC, and control
The BoE representative stresses that uniformity in the financial system is crucial for social welfare, and her intention is not control. In her view, the provision of standards and infrastructure is similar to the services that are already provided and that enable others to implement innovations. As Fortune puts it:
“It is like the services that enable us to use electricity or water. We don’t think of them as government issues, but as essential infrastructure that provides uniform standards and enables us to conduct our daily operations.”
