Central bank digital currency worth a thought: Ramsden

Bloomberg

Developing some form of synthetic central bank digital currency is “worth looking at,” according to Bank of England (BOE) deputy governor Dave Ramsden.
The UK central bank is “very focussed” 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 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. “There’s a big prize here.”
European Central Bank board member Benoit Coeure said 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.
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.”
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.”
“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 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 focussed on that.”