Bank of England Moving Forward with Finance Tokenization
Sir Jon Cunliffe, the deputy governor of the Bank of England (BoE), delivered a speech at the Innovative Finance Global Summit in London on April 17 discussing the advancement of tokenization.
The central bank of the UK is currently exploring tokenization in bank money, non-bank money, and central bank money, and examining how tokenized assets will interact with each other. While stablecoins could offer improved efficiency and functionality in payments, Cunliffe cautioned that it is highly improbable that any of the existing stablecoin offerings would meet the stringent standards for robustness and uniformity that are applied to commercial bank money and the current payment systems. The Bank of England plans to work together with the Financial Conduct Authority on regulations after the Financial Services and Markets Bill is enacted.
He also stated that a digital pound could provide a platform for a wide range of innovators and play a significant role in the economy, similar to cash. Additionally, he suggested that a mechanism could be created to ensure that wholesale tokenized transactions settle in central bank money, adding to financial stability.
Cunliffe also mentioned that synchronizing tokenized transactions with the British central bank's real-time payment system is potentially possible with ongoing upgrades. Furthermore, the US Federal Reserve recently announced the launch of a new instant payment system called FedNow.
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