A member of the Bank of England’s digital currency forum has warned that hampering the development of a central bank backed digital currency (CBDC) could stifle innovation in the UK.
Jess Houlgrave, who sits on the Bank of England’s CBDC Engagement Forum, which advises Threadneedle Street on the development of a CBDC, told City A.M. that policymakers need to tread a fine line in their approach to digital currencies.
“We need to be really careful about how we talk about CBDCs and cryptocurrencies as institutions that the population can trust, because what we’re in danger of doing if we overreact is quashing innovation,” she said
Her comments come after a House of Lords committee labelled a CBDC as a “a solution in search of a problem” which could present “significant challenges for financial stability”.
Houlgrave, who heads crypto strategy at payments firm Checkout.com, said there had been positive moves in the space over the past 18 months, however, as bodies like the FCA, the Bank of England, and the Treasury had begun to engage more seriously with cryptocurrencies.
The Treasury laid out plans in April to make the UK a “global cryptoasset technology hub”, and moved to bring stablecoins within regulation, paving their way for use in the UK as a recognised form of payment.