Bitcoin could revolutionise payments to the same extent that the internet changed the way we access information, the Bank of England has said, as it considers the possibility of backing its own digital currency.
The remarks came as part of the launch of the BOE’s One Bank Research Agenda, a new framework for the central bank’s research that will see it cover topics outside of traditional financial services in response to the 2012 Stockton review.
The Bank said that additional research would be necessary to find a way of creating a bank-backed cryptocurrency “without compromising a central bank’s ability to control its currency and secure the system against systemic attack”. It also said that it could investigate whether moving to digital currencies could threaten traditional banking models.
But the risks could be outweighed by the benefits of payments innovation, the Bank continued, as new technology has already “enabled the emergence of new business models, such as peer-to-peer lending and crowdfunding, which create alternative sources of finance for both individuals and businesses”.
Greece’s new finance minister Yanis Varoufakis suggested in early 2014 that suitably adapted bitcoin technology could be used as a “weapon against deflation” in the Eurozone. His recent appointment as part of the Syriza party’s win has resulted in speculation about the possible creation of a fedcoin.