New Forms of Digital Money

Published: June 08, 2021

Global Digital Finance (GDF) welcomes the publication of the Bank of England Discussion Paper on new forms of digital money. It follows the extensive work that the U.K. Government has been doing in the digital assets and will no doubt act as a catalyst in the space. This is an important step by the Bank of England and follows on from the work that HM Treasury has been doing earlier this year. GDF makes itself available to assist the Bank of England and HM Treasury in and will act as an industry resource in their work on stablecoins and CBDCs.

Lawrence Wintermeyer, Executive Co-Chair at Global Digital Finance says, “This is an area that GDF has been working closely through convening industry discussion and input on behalf of the Kalifa Review, the HMT Consultation paper on Stablecoins, and last year’s Bank of England Discussion Paper on CBDCs. We are starting to see all these strands come together and look forward to the next steps to help lead these digital innovations.

“The UK is a leader in innovation in the finance sector, and is at an important juncture where new forms of digital money offer unlocking great potential in delivering money faster, cheaper, and more efficiently to consumers and businesses. The timely implementation of a CBDC in the U.K. will attract an influx of industry into the U.K., bourgeoning new industry activity, and boosting economic growth.”

Lavan Thasarathakumar, Director of Regulatory Affairs EMEA, says, “The U.K. is taking a very considered approach to this area and must avoid innovation in the digital asset space being tied down by weighty and disproportionate regulation. This was the sentiment when initial discussions were moving in the direction of stablecoin issuers needing to obtain a banking or a banking-like license to operate. GDF has been advocating to the Bank of England and HM Treasury that a more proportionate approach must be taken that reflects the risk profile of stablecoins.

“Similar to the creation of the e-money regulations that allow for more proportionate regulation for the activity that EMIs conduct, an approach is required to create a more effective way of regulating new digital payments that engenders trust and confidence to citizens. We are encouraged to see that the Bank of England has included this in the paper.”