The Bank of England has indicated that it’s not adverse to the principle of Britain’s own cryptocurrency. This sea change provides UK retailers with even more impetus to create systems to enable transactions via blockchain technology.
Bank of England’s firm “maybe”
The Bank of England Governor, Mark Carney, was speaking at the Riksbank Anniversary conference in Sweden. He announced that a central bank digital currency was entirely possible.
This is despite previously referring to cryptocurrency as something that has “pretty much failed thus far.”
Early in 2018, it was reported that he went so far as to tell students at London’s Regent’s University: “Nobody uses it as a medium of exchange”. However, at that time, Carney did acknowledge the interesting possibilities presented by the blockchain technology behind Bitcoin and its successors.
Since then, a Bank of England report (Central bank digital currencies — design principles and balance sheet implications) has explored the idea of a central bank digital currency in more detail. The report says there is no reason to suspect it would affect the UK economy adversely.
More research and control
Clearly, this is such a complex topic, that more research is vital to ensure digital currency could be introduced in a way that doesn’t destabilise or disrupt monetary policies and financial stability in the UK. This includes consideration of how widely available this new currency would be.
However, the indication is that this research has begun. This is also a sign of the growing respect that is gathering around a development that has left many retailers “cold” or suspicious. Some online global retailers – like Expedia, Microsoft and eGifter – were quick to add cryptocurrency to payment options. The first big name off the “starting block” was overstock.com which began using it as a payment method way back in January 2014.
However, reading through a directory of physical retailers in the UK who accept Bitcoins (the original and best-established cryptocurrency) doesn’t take long!
Fears about a burst in the Bitcoin “bubble” could be largely to blame for why merchant acceptance has been so sluggish. It doesn’t help that understanding of how it works is still rather scarce on the ground.
Also, though cryptocurrency is widely promoted as being a highly secure, irreversible and tamper-proof method of carrying out transactions, its decentralised nature is treated with suspicion.
The UK financial watchdog recently announced that it’s currently investigating potential problems with 24 unauthorised companies in this sector, and considering seven reports from inside the industry.
There’s also strong evidence that other regulators across the world are getting into gear, to start to better control the cryptocurrency industry, providing improved protection for investors. This includes US regulators, who have landed fraud charges on several companies.
On one hand, this adds to fears that digital currency is open to abuse. On the other, the work of regulators to better manage it suggests it is being taken more seriously. Therefore, UK retailers can’t afford to ignore it for much longer. This may require retail recruitment to acquire the skillsets needed to change systems over and manage the meteoric rise of Bitcoin…..and potentially the new “Brit” coin.