As reported by reuters.com, Jon Cunliffe who is the Bank of England Deputy Governor stated it was not his job to protect banks from the impact of future digital currencies, which could significantly reduce households’ willingness to hold money in traditional banks.
Cunliffe mentioned at an online seminar:
“Our job is not to protect bank business models”
“Banks will have to adjust. Our job is to ensure that if bank business models change, we manage the financial and macro-economic consequences of that.”, he added.
Central bank digital currencies (CBDCs) would allow holders to make payments via the internet and possibly even offline.
Several central banks have warned that extensive use of CBDCs could hollow out commercial banks.
Cunliffe noted that the political world needed to step up their assessment of the implications of any future CBDC.
He stated, “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”.