“If that’s what happens, it offers the potential for lower costs and for more flexible payments for people and I think it will be more inclusive.
“It’s hard to know where this is going to end but I think there are significant opportunities here.”
Dr Lowe, however, drew a distinction between digital tokens backed by a central bank and those that might be offered by the private sector.
A CBDC would operate like dollars and coins, where the money is backed by the bank and the government. It is often described as “fiat money” as it is not backed by a commodity such as gold but by a government’s control of the money supply and the ability to raise taxes.
Stablecoins, such as Tether or Facebook’s Diem, are private sector versions of a digital currency. The coin is backed by an asset such as gold, government debts or holdings of a real currency such as the US dollar.
These types of “private” money have existed in…