Bank of England executive reveals UK may need digital Pound following FTX’s collapse

Jon Cunliffe, Bank of England’s deputy governor, stated that there might be a need to consider the digitalization of the British pound, following FTX’s bankruptcy.

He made this suggestion while discussing the meltdown of the embattled crypto exchange, FTX. closely looking at the potentiality of issuing a digital version of pounds. 

In the early moment of the crash, the Bank of England executive claimed he never thought of a correlation between FTX’s devastating crash and the central bank’s work on a central bank digital currency. 

Speaking at the Warwick Business School’s Gilmore Centre Policy Forum Conference on DeFi and Digital Currencies, he disclosed that he now understands the connection and foresees a chance to push the idea of the pound’s digitization into realization.

Read Also: Singapore reveals $275m FTX investment

Bank of England Deputy Governor, Jon’s comments

Cunliffe said, speaking at the Warwick Business School’s Gilmore Centre Policy Forum Conference on DeFi and Digital Currencies, “Over the past few days, I have had a few comments, both to the effect that the collapse of FTX shows that we need to get on and issue a digitally native pound, and to the effect that FTX shows that we do not need to do so.”

The comments are justified, as FTX in particular is “emblematic of these new technologies and the possibility that they might revolutionize financial services and the forms that money takes,” according to the deputy governor.

Sam Bankman-Fried’s multi-billion-dollar crypto enterprise FTX filed for bankruptcy in the U.S. early this month. On Monday, Cunclifffe mentioned that crypto needed to be subjected to appropriate and strict policy frameworks in the U.K. to protect investors, traders, and users’ financial security and provoke development. Cunliffe has previously requested the extension of the scope of existing financial regulations to the crypto ecosystem.

The Bill is currently being debated in the U.K Parliament

Currently, the financial services and markets bill that could end crystallizing Jon’s proposition— the regulation of crypto as financial tools; thus providing U.K regulators extra control over the sector— is presently being looked at in the parliament. As initiated by the Bank of England, the regulatory framework will regulate massive issuers of payments-centred crypto assets like stablecoins. 

Also, there are ongoing plans by the central bank to begin a consultation on stablecoins in 2023. The intention of this consultation is to consider carefully “the requirements for corporate structure, governance, accountability, and transparency necessary” to meet the expectations saddled on other core elements of the financial system, Jon Cunliffe emphasized on Monday. “The sudden FTX crash and its catastrophic boomerang show how vital these aspects are,” he added.

Read Also: Will the FTX crash affect stablecoins?

This advancement is exciting, and it is largely driven by the modernized trajectory of the financial world—the digitalization of money, thus minimizing the role of cash and, more generally, the increasing digitalization of daily life. The trends in the financial ecosystem reveal a massive reckoning for virtuality.

“Our approach as regulators should be open – by which I mean we should be prepared to explore whether and if so how the necessary level of assurance equal to that in conventional finance could be attained. But we should also be firm that where it cannot, we are not prepared to see innovation at the cost of higher risk,” the Bank of England executive said.

The Bank of England is the central bank of the United Kingdom. Established in 1694 to act as the English Government’s banker, and still one of the bankers for the Government of the United Kingdom, it is the world’s eighth-oldest bank.