BOE’s Ramsden Says Central Bank Digital Currency Worth a Thought
(Bloomberg) -- Developing some form of synthetic central bank digital currency is “worth looking at,” according to Bank of England Deputy Governor Dave Ramsden.
The U.K. central bank is “‘very focused” on what should be done to provide public infrastructure to encourage private innovation, said Ramsden, who oversees payments and fintech. Creating a digital currency with other central banks is “worth looking at because there is a big issue with the cost and efficiency of payments” across borders.
It’s an idea that has previously been raised by BOE Governor Mark Carney, who used a high-profile speech in Jackson Hole, Wyoming in August to float the concept of replacing the dollar’s role as the international reserve currency with a stablecoin, like Facebook Inc.’s Libra. The BOE chief told lawmakers in London Tuesday that the current offering to consumers and business is “not good enough in this day and age.”
“We should always be challenging ourselves on whether we do more, because the consumer demand, both in advanced economies and in developing economies, is for greater efficiency,” Ramsden said in a Bloomberg interview Thursday. “There’s a big prize here.”
At the same time, European Central Bank board member Benoit Coeure said this week that regulators have to be prepared for a revolution in digital currencies and that central banks must adapt. A Group of Seven report said that company-created currencies will create challenges for competition and antitrust policies.
Here are more highlights from the interview with Ramsden:
BOE focused on human accountability with machine learning
Ramsden said the BOE’s latest research into machine learning has shown greater development and wider use in trading strategies than had previously been appreciated. While that could offer significant efficiency gains, he said it also means the central bank needs to consider the risks and put in place an accountability regime.
“How do you make this stuff comprehensible so that someone understands what it’s doing in its machine learning, and then a human can be held to account for that?” he asked. “You make sure you insert a human into the process so that we can then have a point of contact as a supervisor. So as well as applauding the efficiency and effectiveness gains, you can also say when you’re being held to account for that.”
The MPC is happy with its zero-lower bound guidance
Asked about the extent of agreement within the nine-member group over the view that the lower bound for rates lies just above zero, Ramsden said that “we would revisit that when we needed to, but that’s a pretty stable view.”
There’s plenty of time to name a new governor
“The Treasury runs this process, they’ve stressed that the process is on track. And we’ve got here a very strong and settled senior team -- not just governors -- executive directors, lots of experience, everyone knows what they’re doing. The governor was saying Tuesday there’s still plenty of time for this to be resolved. And there’s other stuff going on. We’ve got a strong and settled team, we all know what we’re doing, and we’re getting on with it.”
Ramsden declined to say whether he had applied for the role, but said that he already has a “really challenging job at a really interesting time, so I’m just focused on that.”
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