Policy

Written evidence for the House of Lords Economic Affairs Committee inquiry on Central Bank Digital Currencies (2021), with F. Fraschini and T. Terracciano

• Consumers might have some benefits from lower transaction costs, faster payments, and increased competition.

• A CBDC would change the relationship between the BoE and the banking sector, with the latter becoming even more dependent on the BoE.

• The BoE would have a direct channel with consumers, thus being able to implement more effective and targeted monetary policies.

• A CBDC might blur the line between monetary and fiscal policy, gradually shifting responsibilities from HM Treasury to the BoE.

• Whether to introduce a CBDC is mainly a political decision over the role and powers of the BoE.

Stabilizing stablecoins: a pragmatic regulatory approach (2020), with T. Terracciano

We propose a framework for regulating stablecoins as a new asset class. We de- fine stablecoins as those digital currencies which are centrally managed and backed by other assets. We compare stablecoins and ETFs under the principle that similar risks should be treated in a similar fashion (FINMA 2019). Hence, we propose to lock stablecoins into an ETF-like structure, along with restrictions on the basket composition, would significantly reduce regulatory concerns. Stablecoin providers would be functionally similar to ETF sponsors and stablecoins would be a new vehicle for traditional fiat currencies. Finally, we address common macroeconomic concerns in light of our proposed frame- work.

Media: Financial Times, VoxEU, Il Sole 24 Ore, Cointelegraph (see Outreach page)