Blockchain and digital assets offer folks the ability to store their own assets, possibly threatening the solution banks offer. Making sure banks remain relevant is not on England’s central bank to-do list, however, according to the Bank of England’s deputy governor Jon Cunliffe.
“Our job is not to protect bank business models,” Cunliffe said, as reported by a Friday Reuters brief. “Banks will have to adjust,” he added. “Our job is to ensure that if bank business models change, we manage the financial and macro-economic consequences of that.”
Cunliffe posited it is not the responsibility of the Bank of England to ensure mainstream banking businesses remain relevant. Central bank digital currencies, or CBDCs, pose a threat to the solutions commercial banks provide, cutting them out as middle men. Crypto more broadly presents users with the option of self-custody, which challenges banks, although banks still function as fiat currency on-ramps.
China seemingly leads the CBDC race at present, already testing its digital yuan. CBDCs hold far-reaching implications. “They need to go up the political agenda quite fast before the political side discovers there are developments in the private sector that actually don’t fit with policy,” Cunliffe said. Cunliffe is implying that governments across the globe must prioritize conversations around these assets, due to the changes they may bring.
Contrasting other nations sprinting toward the CBDC finish line, leading financial regulators in the United States have denied the need to be first.