Former Bank of England advisor Huw van Steenis has stated that central banks are not running scared of cryptocurrencies. He believes retaining control of money forms the crux of their move towards central bank digital currencies (CBDCs).
In a recent interview, Van Steenis, currently senior advisor to Ralph Hamers, CEO of the Swiss private bank UBS, called CBDCs “a solution in search of a problem.” He asserted that the crypto space is still rather small compared to the amount of money accrued in bank deposits.
As such, he opined that the central banks do not consider crypto to be a threat. But rather, they consider where they can adapt and innovate.
The interview comes a week after an article by Van Steenis was published on Bloomberg. The former top advisor at the Bank of England said in the opinion piece that innovation in central banking “often starts in small markets.” He alluded to the Bahamas and Cambodia leading China’s position on electronic central bank monies.
Alongside the article, published on May 13, he emphasized certain points on Twitter, saying “Finland pioneered the world’s first central bank digital currency,” one tweet said. “The experiment has some important lessons for those feverishly trying to figure out how revolutionary CBDCs will be.”
World’s stance on CBDCs
Within his article, he referred to the UK making its move towards a CBDC. Back in April, the Chancellor of the Exchequer Rishi Sunak announced the launch of an exploratory task force to oversee the creation of “a digital pound.”
The task force comprises a collaboration between Van Steenis’ former stomping ground, the Bank of England, and HM Treasury. The former has also set up a unit especially dedicated to a CBDC, with the Bank’s deputy governor John Cunliffe at the head.
Van Steenis quoted the opening paragraph of his Bloomberg article in a tweet, reiterating that “Digital pounds, dollars and euros are years away, but radical changes in wholesale banking and settlement are coming sooner than you think.”
Meanwhile, China’s stance on cryptocurrencies caused a stir in the last week, as its bank imposed a ban on bitcoin (BTC) transactions and services. Prohibiting financial institutions from offering any services involving cryptocurrency to their clients.
This decision is a radical pivot from the country’s attitude of a month earlier. In April, the People’s Bank of China (PBoC) announced it considered bitcoin “an investment alternative.”
The move comes amid tests of the country’s own CBDC – the digital yuan. Furthermore, reports consider the ban a potential contributing factor to the cryptocurrency price collapse on May 19.