The Bank of Englands consultation on public digital cash could represent the biggest shift in the monetary system for 200 yearsLast week, the Bank of England launched a consultation on a UK central bank digital currency (CBDC) and the regulation of private digital currencies, joining dozens of other central banks around the world who are investigating digital cash and some, like the Chinese, who are already trialling it.Modern digital money that we use for everyday transactions on our credit cards and for online transactions has become increasingly important to the functioning of the economy, accounting for 97% of the circulating money supply. But unlike physical cash and coins, digital money is not created by the central bank or government but by commercial banks. When a bank makes a loan, it creates new, sterling-denominated electronic deposits in your bank account: money. The total money supply in the economy is determined by the rate of new loans issued to households and firms and the rate of repayment by those borrowers.Josh Ryan-Collins is head of finance and macroeconomics at University College Londons Institute for Innovation and Public Purpose Continue reading...

CBDC Central Bank Digital Currency

SHARE THIS STORY:

More Stories