The Bank of England’s deputy governor has warned other central banks against cryptocurrencies since they can harm the business of commercial banks. He claims that digital currencies will never replace fiat.

In a speech at the London School of Economics, responding to those proposing central banks to issue their own digital money for countering the “competitive threat” from private-sector banks, Ben Broadbent suggested analysing the practice from the point of view of private banks. According to Broadbent, while the issuance of a central bank’s own digital currency would increase the loyalty of its clients, it could hamper the ability of commercial banks to lend money.

“Taking deposits away from banks could impair their ability to make the loans in the first place. Banks would be more reliant on wholesale markets, a source of funding that didn’t prove particularly stable during their crisis, and could reduce their lending,” claimed Broadbent, according to Bloomberg.

Bloomberg remarks that Broadbent’s words correlate with the statement of Andy Haldane, BoE Chief Economist, who said that the future of money is one of the “existential” questions for central bankers.

The Bank of England is known for its favourable position towards digital currencies and, especially, bitcoin. According to some estimates, bitcoin-based solutions would let BoE to save as much as £38 bln ($54 bln) a year on settlement processes. However, Broadbent asserted that in the long run the established fiat currencies will remain more trustworthy for the customers than their new digital analogues.

Anna Lavinskaya