Bitcoin ‘May Have Extrinsic Value In The Sense That People Want It’ Says BoE Governor

Bank of England (BoE) Governor Andrew Bailey cautioned over the use of Bitcoin as a means of payment on Monday.

He said he was “very nervous” about people using the leading digital currency for payments because it has uncertain value. Investors should realize that its price is extremely volatile, he said during a BoE question and answer sessions with the public.

He further talked about how the digital currency has little intrinsic value if any. “I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value,” said Bailey.

“It may have extrinsic value in the sense that people want it.”

The intrinsic value of bitcoin remains a central topic of debate amongst bitcoin skeptics and believers.

Read More: BTC Scales Just Fine As A Store Of Value Says MicroStrategy CEO Michael Saylor

Recently, cryptocurrency exchange Kraken in a report dedicated to this subject, talked about how intrinsic value, much like beauty, is in the eyes of the beholder.

“As time passes and bitcoin continues to navigate through uncharted waters, the intrinsic value of bitcoin will also likely change and as a result, so will its market value.”

However, Bailey snubbing Bitcoin isn’t anything new; it has actually been going on for years, even when BTC was at its peak. Just last month, he said, Bitcoin and other crypto-assets have no connection to money, whatsoever, citing its price fluctuation.

“They strike me as fundamentally unsuited to the world of payments where a certainty of value matters,” he had said at that time.

He, however, did feel that stablecoins could offer some useful benefits once consumers could use them with confidence, that is. Fiat-backed cryptos, according to him, can reduce friction in payments by lowering the cost and increasing the speed of payments.

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Author: AnTy

BoE Explores Negative Rates; Bitcoin Is A ‘Must’ Because Fiat is a ‘Giant Ponzi Scheme’

The Bank of England (BoE) is exploring negative interest rates now and in response Sterling weakened sharply.

The pound dropped 0.7% against the dollar after the central bank’s plans “to explore how a negative Bank Rate could be implemented effectively, should the outlook for inflation and output warrant it at some point,” were revealed.

While the negative rates are being considered, the key interest rate at 0.1% and the QE program remained unchanged on Thursday. Petr Krpata, a currency strategist at ING said,

“There was some expectation that one or two dovish members would vote for an increase in QE, but instead the BoE surprised people by revealing that they’ve been discussing negative rates.”

The UK is currently grappling with a resurgence in virus infections and fresh social restrictions to counter them. There are also fears that unemployment could spike when the government withdraws support for wages next month. Adding to this is Prime Minister Boris Johnson’s threats to redraw his Brexit deal with the EU.

The same day, the Bank of Japan and the Federal Reserve also kept the rates unchanged at -0.1% and 0%-0.25% respectively.

This path to sub-zero rates has been already taken by some European peers and of course the BOJ, which means customers are charged for their deposits in banks.

Source: Gemini’s Tyler Winklevoss

In response to BoE contemplating negative rates, Jeff Booth, the author of the book “Price of Tomorrow,” called fiat currencies and economies “a giant Ponzi scheme.” He also said we should expect more banks to announce sub-zero rates.

Earlier this week, he had called Bitcoin “a “must” Not just for your wealth but as a lifeboat.”

Booth fired up his Twitter by explaining how central banks are exponentially adding more debt to escape the massive debt problem. Before the COVID-19 pandemic, the debt was $250 trillion on a global economy of $80 trillion, out of which $185 trillion has been added in the last 20 years only.

“The unwind in whatever form it takes is going to be brutal,” and in that case, the world has only two choices either default through hyperinflation or default though a deflationary depression and the latter one will include the collapse of the banking system, he said.

And all of it because “an economic system (is) trying to fight gravity and catching all of us in its vortex,” said Booth.

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Author: AnTy

Bank of England Taps Accenture to Update Real-Time Gross Settlement Service to Support CBDCs

The Bank of England (BoE) has appointed an Irish tech consultancy giant, Accenture, to assist in the renewal program for its Real-Time Gross Settlement Service (RTGS).

According to the announcement on July 30, the contract awarding follows a public procurement process that began back in February 2019. BoE has since noted that the renewal of its RTGS is set to add value to the U.K payment system in several ways. The announcement reads:

“…the renewed RTGS service is to increase resilience and access, offer wider interoperability, improve user functionality and strengthen the end-to-end risk management of the UK high-value payment system.”

The UK’s RTGS plays an essential role in the country’s financial ecosystem, settling an average of £685billlion every day. Executive Director for Banking, Payments, and Innovation, Victoria Cleland, noted that this milestone would play a significant role in shaping the future of UK’s payment network:

“The Renewal Program is a key priority not just for the Bank but also for the wider UK payments industry.  It will support a resilient financial system that protects the UK’s financial and monetary stability in the years to come.”

CBDC’s Also in Consideration

Reporting the news first, Coindesk, revealed that the BoE renewal RTGS might be compatible with a digital pound amongst other CBDC’s. The new design will feature tools for ‘bolt-on’ functions, should the BoE decide to integrate CBDC’s. Cleland further echoed that it will keep the U.K. on track when it comes to FinTech innovation:

“The renewed RTGS service will be designed not only to benefit everyone in the country which makes payments but to keep the UK at the leading edge of payments innovation.”

This development coincides with a new spark in CBDC interest by governments and regulators. China is currently ahead of the curve, having launched its digital yuan pilot back in April. Nations like France and Italy have shown willingness to participate in a digital Euro as soon as one is formalized.

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Author: Edwin Munyui

BoE Governor: A CBDC Would Need to Be ‘Very Carefully Designed’ to Overcome Challenges

The outgoing Bank of England (UK Central Bank) governor Mark Carney has reiterated his sentiments regarding a Central Bank Digital Currency. This was after the UK Central bank released a dossier touching on the CBDC that is supposed to store value and facilitate payments for both domestic and commercial transactions.

The Outgoing Canadian is on the move as he was recently offered a lucrative U.N. special envoy on climate action and climate finance post. He is set to be replaced by Andrew Bailey who is currently serving as the head of Financial Conduct Authority. In the discussion paper, Governor Carney said,

“While CBDC (central bank digital currency) poses a number of opportunities, it could raise significant challenges for maintaining monetary and financial stability … and would need to be very carefully designed if it were to be introduced.”

Notably, a CBDC will come in handy as the use of banknotes, the most widely accepted form of currency is in decline with technological breakthroughs paving the way. However, CBDC’s will now present a unique challenge as the Central Bank has predicted that significant deposits moving to CBDC instead of the banks could skew the balance sheets for both commercial banks and the BoE.

This could affect the portion of credit that would be availed to banks, which could fundamentally change how the banks will enforce their policies.

CBDC should work alongside not replace Traditional methods

They have further insisted that the CBDC could only be implemented to supplement the current traditional deposits rather than replace them. The CBDC would be quantified equivalently to the Sterling pound.

“It would be denominated in pounds sterling, so £10 of CBDC would always be worth the same as a £10 banknote.”

Conversations around the CBDC are still ongoing as Mark Carney has explained that the paper lays the groundwork and would be an ice breaker for the CBDC dialogue in UK. They have given a 12th June deadline for those with input regarding the issue.

Collaboration with other central banks

The Bank of England has collaborated with other global central banks the Bank of Canada, the Bank of Japan, the European Central Bank, the Sveriges Riksbank (Sweden) and the Swiss National Bank to look into the feasibility of CBDC.

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Author: Lujan Odera

BoE’s Chief: It Is ‘Absolutely Important’ To Consider Central Bank Digital Currencies

Sarah John, the chief cashier at the Bank of England, has stated that it is imperative that central banks in the world consider researching and supporting digital currencies before it is too late for them, Telegraph UK reports. She said,

“We need to think as an institution about how to position ourselves to make sure society still has a broad range of payments that it can use with confidence.”

“It is absolutely right that central banks think about whether a public sector or private sector would be best to provide a digital currency going forward.”

As the BoE’s chief cashier, John is also the director of notes and she noted that it is also the time for central banks to come up with ways to define what role should be played by the private firms which are offering their respective cryptocurrencies.

Central banks all over the world are increasingly concerned about the rise of cryptocurrencies especially after Facebook announced its intention to introduce the Libra stablecoin. Indeed, BoE together with seven other financial institutions around the world started a working group last month which is geared towards sharing research as well as findings about the formation and the operations of a central bank digital currency (CBDC).

One of the members of the working group, Sweden’s Riksbank, revealed on Friday that it is set to pilot a fresh e-krona project which will run up to 2021. The testing will allow the bank to get firsthand knowledge on the effectiveness of CBDCs in the economy.

According to the Block, late last year, Mark Carney, BoE’s outgoing Governor explained that a digital currency issued by a central bank, has the potential to overthrow the US dollar from the helm of the world’s hedge currency. Carney will be replaced by the current U.K.’s Financial Conduct Authority CEO Andrew Bailey after his term comes to an end on March 16.

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Author: Joseph Kibe

Poland Purchased 100 Tons of Gold – Would Bitcoin Be A Better Purchase?

  • Poland now owns approximately $121.9 billion in gold.
  • The Bank of England previously refused to return gold to Venezuela, citing insurance-related concerns.

When it comes to making smart investments, there are many debates over what that actually means. Poland, for example, seems to be preserving their funds with an investment in gold, purchasing 100 tons of the precious metal from the Bank of England. In doing so, the country has become the 22nd biggest holder of gold in the world, but a recent article from BeInCrypto suggests that the investment may be better off in Bitcoin.

Adam Glapinski, the Central Bank Governor, recently told reporters with BNN Bloomberg that their new reserves show their “strength of the country.” The purchase comes around the same time that the idea of a downturn in the economy is being discussed, which has frequently been a point that the crypto community has used to support their own potential, versus the use of traditional assets.

Poland purchased 126 tons of gold in 2018, and the recent purchase puts the country at 228.6 tons in total. The total value is approximately $121.9 billion, considering they acquired the most gold in the Eastern European Union region.

In November last year, Venezuela pushed for the Bank of England to refund 14 tons of gold. However, as BeInCrypto points out,

“even if a country could repatriate its gold, what guarantee is there if the holding party refuses to return it?”

In the situation between Venezuela and the Bank of England, the latter stated that there were insurance-related matters that prevented the return, and the bank wanted to know what would be done with the gold, in the event it was returned.

As the economy and political landscape continue to change, cryptocurrency is becoming even more important as they become a safe asset for consumers. The movement made by Poland isn’t exactly keeping up with the progress of the economy, but there are other countries that has taken a less progressive path as well.

In Germany, a bank started implementing negative interest rates, specifically targeting consumers that make small deposits. A negative interest rate would charge customers for being the owner of a bank account, which most negatively impacts consumers that don’t have this kind of money to spare. Negative interest rates were originally introduced to the European Central Bank five years ago.

With the economic turmoil in Venezuela, there are many people who have been impacted, leaving consumers unable to even provide for the basic needs of their family. At this time, cryptocurrencies provide an opportunity for individuals to possess their own funds in a provable way. With the portability and practicality that cryptocurrency provides, it is clear that it is an easier asset to deal with.

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Author: Krystle M

BoE Deputy Governor: Central Bank Digital Currencies Are “Worth Looking At”

According to Bank of England deputy governor Dave Ramsden, developing a synthetic central bank digital currency is “worth looking at.”

Ramsden who oversees payments and fintech said currently, the UK central bank is “very focused” on what needs to be done to provide infrastructure to encourage private innovation.

Now, 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.

This idea was also raised by BoE governor Mark Carney, who back in August during a speech in Jackson Hole, Wyoming talked about replacing the dollar as a reserve currency with a stablecoin like Facebook’s Libra.

On Tuesday in London, the BOE chief said currency offerings to business and consumers are “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 told Bloomberg. “There’s a big prize here.”

This week, European Central bank member Benoit Coeure said the regulators have to be prepared for revolution in digital currency space and central banks must adapt. Earlier this month he said Libra was a “wake-up call” for central banks while Germany’s Finance Minister, Olaf Scholz, said:

“We encourage European central banks to accelerate work on issues around possible public digital currency solutions.”

Meanwhile, some of the G20 central banks are experimenting with central bank digital currency (CBDCs). China is one of the prime examples that are “almost ready” with its sovereign digital currency.

The US is not considering issuing a CBDC right now but “following very carefully.” Japan and South Korea are other countries without a plan to issue a central bank digital currency. Russia has repeatedly indicated its plans to issue a CBDC, but not in the immediate future. India, on the other hand, is working on a draft bill for the same.

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Author: AnTy

Bank Of England Spells Out UK’s Requirements for the Libra Coin Launch

United Kingdom’s central bank, Bank of England, has announced a raft of rules that Facebook’s Libra crypto must adhere to if it wishes to launch in UK.

In its October Financial Policy and Summary released by the bank’s Financial Policy Committee, BoE stated that it discussed innovative explorations within the financial and payment sector. As per the release, the bank noted that Libra has the capability of becoming ‘a systemically important payment system’ in the future.

According to the FPC, a system like Libra should comply with the highest standards of resilience and fall under the relevant supervisory oversight. In addition, the FPC called on regulators to come up with terms of engagements for various innovative payment systems before they can be introduced in the market.

A key aspect of the policy summary is that BoE stated it would require access to allow for monitoring of the payment chain information as a key condition. However, the FPC urged regulators to utilize their powers accordingly as per the published principles.

The document also explained that the Libra Association, as well as the Libra Reserve of different fiat monies, are of high importance. The FPC continued to explain that the platform participants, wallet providers as well as validators will also need to be regulated and scrutinized thoroughly.

CoinDesk reports a similar form of measures and conditions were discussed by Olaf Scholz who was earlier this week nominated as the EU Commission’s finance minister. During the discussion, Scholz stated that EU should come up with a regulatory framework for such payment networks like Libra.

The Libra project has come under intense scrutiny and skepticism with both German and French finance ministers saying that Libra cryptocurrency should never be allowed to launch on European soil since it will undermine the sovereignty of their nations, Cointelegraph reports. The two ministers argued that it was the work of the government to issue currency and that mandate should never be left on private entities.

The UK seems to be open to a discussion on the prospect of Libra being launched in the country as it positions itself as Europe’s financial hub in the wake of Brexit.

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Author: Joseph Kibe