DGC0055.pdf

The Bank of England's mission is to promote monetary and financial stability, and its work on digital currencies and Distributed Ledger Technology (DLT) focuses on their potential impact on stability. The Bank distinguishes between privately-issued digital currencies (crypto-assets), the underlying DLT, and adapted DLT versions for financial services. Crypto-assets are unlikely to replace traditional payment systems due to their volatility, limited acceptance, capacity constraints, high transaction costs, and energy usage. They do not function well as a store of value, means of payment, or unit of account, and are not being used as a substitute for national currencies. The Bank does not think crypto-assets will replace traditional payment systems in the foreseeable future, and they do not currently pose a material threat to financial stability due to their minimal use in payments, small market capitalization, and negligible exposures of UK financial institutions.