On Digital Currency, Global Commerce, Central Banks and more
Last week, Mark Carney, head of England’s Central Bank discussed technology innovation within the global financial system at an economic conference in Jackson Hole, Wyoming. His comments included:
“We would do well to think through every opportunity, including those presented by new technologies, to create a more balanced and effective [financial] system.
“Retail transactions are taking place increasingly online rather than on the high street, and through electronic payments over cash. And the relatively high costs of domestic and cross border electronic payments are encouraging innovation, with new entrants applying new technologies to offer lower cost, more convenient retail payment services.
“The most high profile of these has been [Facebook’s] Libra – a new payments infrastructure based on an international stablecoin fully backed by reserve assets in a basket of currencies including the US dollar, the euro, and sterling. It could be exchanged between users on messaging platforms and with participating retailers.
“The Bank of England and other regulators have been clear that unlike in social media, for which standards and regulations are only now being developed after the technologies have been adopted by billions of users, the terms of engagement for any new systemic private payments system must be in force well in advance of any launch.
"it is an open question whether a new [currency] would be best provided by the public sector, perhaps through a network of central bank digital currencies."
Technology and financial innovators will continue to introduce offerings that will 1) reshape global commerce and 2) accelerate the development of new rules and guidelines by government decision makers.
Given imbalances and inefficiencies in today's global markets, which includes about 180 currencies, the adoption and broad use of a global digital currency is only a matter of time.
As focus increases on digital currency, concerns about data hacking, personal privacy and supporting non-digital citizens need to be addressed.