The Bank of England said on Monday that payments with 'stablecoins' - a form of cryptocurrency usually pegged to a traditional currency - should be regulated in the same way as payments handled by banks if they start to become widely used.
The central bank also said it had made no decision yet about whether to issue its own central bank digital currency, or CBDC, a prospect dubbed 'Britcoin' by finance minister Rishi Sunak when he asked the BoE to look into this in April.
If digital currencies become big enough to have an impact on financial stability, they would require greater regulation than at present, the BoE said. The People's Bank of China is leading the charge, and the U.S. Federal Reserve last month said it would accelerate its work on a digital dollar.BoE Deputy Governor Jon Cunliffe said last month there was a good case for the BoE to issue its own digital currency, as any private-sector alternative could be dominated by one or two big companies, with cost and privacy implications.
As part of Monday's discussion paper, the BoE modelled a scenario under which a fifth of money currently held as retail deposits with British banks instead was held in new forms of digital currency such as stablecoins or a CBDC.
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