BoE’s Cleland discusses extending digital central bank money to the public

Costs and benefits need to be better understood, says Cleland, but the Bank of England is investigating all avenues
Victoria Cleland
BoE chief cashier Victoria Cleland. Image: Bank of England

Victoria Cleland, the Bank of England's (BoE) chief cashier, has raised the question of what would happen if businesses and consumers could transact central bank money "directly and instantaneously" using cryptocurrency.

Speaking today (September 8) at an international workshop on peer-to-peer financial systems, Cleland noted that at one end of the spectrum a central-bank-issued digital currency could be "quite limited and reserved", offered only to financial institutions.

But "really big questions arise", she said, where cryptocurrency is available to everybody – allowing businesses and households to hold balances in central bank money and to pay each other in real time with full and final settlement in an electronic format.

"The question is what could the benefits and costs be... of allowing businesses and consumers to transact directly and instantaneously in central bank money," she said. One outcome could be a drop in deposit funding for commercial banks: "The risks that this could pose need to be fully explored and understood."

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