Deputy Governor Sir Jon Cunliffe spoke at an event where he highlighted the growing demand for tokenization in the economy.
The Deputy Governor of the UK’s central bank Sir Jon Cunliffe recently spoke at the Innovative Finance Global Summit held in London, where he touched upon tokenization as an effective tool to be used by the central bank in different forms of money. He broadly looked at four aspects of potential areas where tokenization is being implemented, including payments, commercial bank deposits, and the Digital Pound. He lastly spoke about the Bank of England’s role in effectively enforcing these digital forms of money.
“Stablecoins offer the possibility of greater efficiency and functionality in payments. But they currently sit outside most of the regulated framework, and it is extremely unlikely that any of the current offerings would meet the standards for robustness and uniformity we currently apply both to commercial bank money and to the existing payment systems that transfer commercial bank money between the parties to a transaction,” said the Deputy Governor.
The Financial Services and Markets Bill would enable the Bank of England to regulate stablecoin and other digital assets issuers by partnering with the Financial Conduct Authority. Both authorities plan to work together on the regulation of such assets.
Sir Cunliffe also stressed tokenization for bank deposits, which could then compete freely with non-bank stablecoins. According to him, it was a much better option since bank deposits in the UK were robust and uniform. He also spoke on the importance of the digital ledger technology of crypto, which would enable the free circulation of tokenized bank deposits.
He then went on to speak about the UK’s CBDC, the Digital Pound, and the need for synchronizing the Bank of England’s real-time payment system with tokenized transactions.