The Bank of England, or BoE, is broadening its assessment of digital currencies, including evaluating how these assets could form the basis of a “new monetary order.”
Andy Haldane, the bank’s chief economist and sitting member of the Monetary Policy Committee, gave a speech on Wednesday at the TheCityUK 10th Anniversary Conference.
The 19-page transcript, titled “Seizing the Opportunities from Digital Finance,” delves into various topics related to digital currencies and their impact on financial stability and monetary policy.
The “traditional model of banking would be disrupted” by a widely used digital currency, Haldane said, adding that more attention needs to be given “to the potential longer-term benefits of such a structural shift.”
One such benefit is the emergence of so-called narrow banking, which would partially segregate banks’ “safe” payments-based activities from their riskier credit business.
“In principle, separating safe payments and risky lending activities could lead to a closer alignment of risk and duration on the balance sheets of those institutions offering these services.”