Bank of England Governor Mark Carney said distributed ledger tech (DLT) initiatives could “unlock billions of pounds of resources and liquidity”— and might one day see greater collaboration with the central bank itself.
Carney spoke at the City of London’s Lord Mayor’s Bankers and Merchants Banquet on June 20, according to posted comments. In a lecture focusing on fresh types of economic products and facilities, Carney said that “the Bank of England is presenting plans to advise on giving access to our balance sheet to fresh payment suppliers,” adding that “this access could empower a number of fresh innovations.” It was at this stage that Carney referenced the blockchain and DLT front, showing the audience:
“In wholesale markets, consortia of broker dealers are working to develop settlement systems using distributed ledger technology that could overhaul how markets operate. These consortia, such as [Utility Settlement Coin], propose to issue digital tokens that are fully backed by central bank money, allowing instant settlement. This could also plug into ‘tokenised assets’ – conventional securities also represented on blockchain—and smart contracts. This can drive efficiency and resilience in operational processes and reduce counterparty risks in the system, unlocking billions of pounds in capital and liquidity that can be put to more productive uses.”
On their face, the remarks give a sign that businesses using DLT might one day be prepared to tap straight into the facilities of Bank of England. Fnality, the Utility Settlement Coin (USC) company, raised just over $63 million in fresh financing, as stated by the Wall Street Journal early June. Carney transferred to a topic he touched on previously this week during his appearance: Facebook’s newly-unveiled cryptocurrency, Libra. In the aftermath of the announcement, Carney noted that he hopes Libra to meet high standards of adherence and regulation, and he reaffirmed that feeling on Thursday.
“Unlike social media for which standards and regulations are being debated well after it has been adopted by billions of users, the terms of engagement for innovations such as Libra must be adopted in advance of any launch. Libra, if it achieves its ambitions, would be systemically important. As such it would have to meet the highest standards of prudential regulation and consumer protection. It must address issues ranging from anti-money laundering to data protection to operational resilience. Libra must also be a pro-competitive, open platform that new users can join on equal terms. In addition, authorities will need to consider carefully the implications of Libra for monetary and financial stability.”
On Wednesday, Carney’s American counterpart, U.S. Federal Reserve chairman Jerome Powell, said that Facebook had met with representatives of the Fed and that the project was “something we’re looking at.”