The Bank of England released a second discussion paper exploring new forms of digital money including stablecoins and a potential U.K. central bank digital currency (CBDC).
- The paper published today follows a previous discussion paper published in March 2020 that highlighted the broad risks and opportunities in launching a CBDC.
- The new paper focuses on the implications that adoption of private stablecoins could have for the cost and availability of lending, and the difficulties this could present for monetary policy.
- New forms of digital money could offer benefits of cost and functionality, while a CBDC could enhance the effectiveness of monetary policy by shortening the timescales for clearing and settlement.
- "But these opportunities can only be realized if new forms of digital money are safe," the paper said. "They could be privately provided – in the form of stablecoins. Or they could be publicly provided – in the form of a CBDC."
- The Bank of England is inviting responses from stakeholders in banking, payments and elsewhere in financial services.