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BoE policymaker: digital currencies could be part of new monetary order

Bank of England policymaker, Andy Haldane thinks a frequently used digital currency could have a positive impact on monetary policy.

According to cointelegraph, the Bank of England (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 transcript, titled “Seizing the Opportunities from Digital Finance,” delves into different topics related to digital currencies and their impact on financial stability and monetary policy.

Haldane noted that traditional model of banking would be disrupted by a widely used digital currency. More attention needs to be given to the potential longer-term benefits of such a structural shift, he added.

Haldane stated:

“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.”

The central banker believes a digital currency could mitigate the prevalence of negative interest rates. He added:

“In principle, a widely-used digital currency could mitigate, if not eliminate, that technological constraint by enabling interest rates to be levied on retail monetary assets.

The BoE is also exploring the different use cases of a central bank digital currency (CBDC), but has not made any decision on the matter, according to fintech director Tom Mutton.

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