Written answers

Thursday, 10 November 2016

Department of Finance

Central Bank of Ireland IT Operations

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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98. To ask the Minister for Finance his views on the recent comments by the Governor of the Central Bank (details supplied) that technological innovation may alter the role of central banks in managing the money supply and acting as a lender of last resort in the context of widespread adoption of private sector digital currencies; and if he will make a statement on the matter. [34108/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Governor of the Central Bank made remarks back in June on the topic of technological innovation and financial services. I think it is important to be clear on what the Governor said. He said that in addition to the four primary challenges he identified in the regulatory treatment of financial innovations, technological innovation may also alter the role of central banks in managing the money supply and acting as a lender of last resort.

He instanced the growth in electronic forms of payment and said that at one level this growth looks set to reduce the traditional role of notes and coins in the monetary system. He noted that this may have implications for the role of central banks generally in managing the money supply. He also said that, at another level, there is much discussion on the relative merits of more widespread adoption of private-sector digital currencies versus a new role for central banks in the direct issuance and management of publicly-backed digital currencies.

If, in time, there is to be a new role of this kind for central banks in the Euro area, it would have to be agreed at a European level. The Committee on Economic and Monetary Affairs of the European Parliament published a report on virtual currencies in May 2016 which called for the creation of a horizontal taskforce on distributed ledger technology to be set up under the leadership of the European Commission. The Deputy is likely to be aware that the European Commission has published proposals to amend the fourth Anti-Money Laundering Directive including provisions on virtual currencies and negotiations on these proposals are ongoing.

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