In The Future of Money, delivered at the Scottish Economics Conference, Mark Carney provided insights into the implications of cryptocurrencies and the potential for CBDCs. He acknowledged the disruptive influence of cryptocurrencies like Bitcoin, which emerged from distrust in traditional financial institutions during the 2008 crisis. Despite their popularity, Carney critiqued cryptocurrencies for being poor stores of value, inefficient mediums of exchange, and virtually unused as units of account. He highlighted their extreme volatility and lack of intrinsic value, which make them unsuitable as reliable money.
Carney discussed regulatory challenges, suggesting that while crypto-assets pose minimal risks to financial stability due to their small scale, issues like money laundering and terrorism financing require urgent attention. He advocated for a regulatory framework to ensure crypto-assets meet the same standards as other financial assets, particularly in areas of market integrity and consumer protection. Carney also hinted at the potential benefits of blockchain technology, which underpins cryptocurrencies, for enhancing transparency, efficiency, and resilience in financial systems.
On the future role of central banks, Carney explored the possibility of a CBDC that could leverage the advantages of cryptocurrencies while providing the stability of fiat currencies. However, he noted that technological and policy challenges, including impacts on traditional banks and issues surrounding privacy and data use, make a widely accessible CBDC a distant prospect. Meanwhile, Carney emphasized the Bank of England's efforts to modernize its Real-Time Gross Settlement (RTGS) system to support innovations in digital payments and improve financial system resilience, including exploring compatibility with distributed ledger technology for enhanced efficiency and security in settlements.