Central Bank Digital Currency Development Enters the Next Phase

Many thanks for the introduction, Terry. It is a pleasure to be here this evening. Let me also add my thanks to you, Minette. You have been a strong and clear voice for British farming throughout your term as President of the National Farmers’ Union. What a time it has been. Costs have been rising sharply. Trading arrangements and farm support have been changing. Summer droughts have been followed by winter floods. It is no small job to confront all of those challenges. I would like to spend my time this evening talking about food price inflation. To set the scene, I will start by showing a chart with the evolution of overall consumer price inflation over the past five years. Chart 1 shows how inflation (the white line) fell below the Bank’s 2% target in the first year of the pandemic before it started to rise above the target in the second half of 2021, reaching a peak of 11.1% in October 2022. It shows how inflation has since come down significantly again, to 4.6% in the latest data for October published last week. In the shaded area, it shows how we expect it to remain around this level for the remainder of the year. In our forecast, it then continues to fall back towards the 2% target over next year. Last week’s data release was good news. It means that we are on track to bring inflatio tweet: BOE GOV. BAILEY: IT IS FAR TOO EARLY TO BE THINKING ABOUT RATE CUTS. tweet: <GBP=>: *BOE'S BAILEY: INFLATION RISK FROM FOOD PRICE INFLATION AHEAD *BOE'S BAILEY: MIDEAST EVENTS ADD TO UPSIDE ENERGY PRICE RISKS ? *BOE'S BAILEY: CONCERNED ABOUT SECOND ROUND EFFECTS ON FOOD tweet: BoE’s Bailey: The Labour Market, Despite Softening Recently, Remains Tight And Wage Inflation Remains Elevated tweet: BOE GOV. BAILEY: THE MONETARY POLICY COMMITTEE’S LATEST PROJECTIONS INDICATE THAT MONETARY POLICY IS LIKELY TO NEED TO BE RESTRICTIVE FOR QUITE SOME TIME YET.

tweet: SEC just filed a case against Kraken Exchange (Payward, Inc) @krakenfx [announcement: I’m moving to @SynopticCom soon] pic.twitter.com/7SK3wYP3ej tweet: U.S. SEC SUES KRAKEN FOR OPERATING ONLINE CRYPTO TRADING PLATFORM WITHOUT REGISTERING WITH THE AGENCY -- COURT FILINGSecurities and Exchange Commission v. Payward, Inc. Since 2013, Kraken has operated an online trading platform through which its customers can buy and sell crypto assets, many of which form the basis of investment contracts covered under U.S. securities laws. Without registering with the SEC in any capacity, Kraken has simultaneously acted as a broker, dealer, exchange, and clearing agency with respect to these crypto asset securities. In doing so, Kraken has created risk for investors and taken in billions of dollars in fees and trading revenue from investors without adhering to or even recognizing the requirements of the U.S. securities laws that are designed to protect investors. 10 2. Kraken’s business practices, deficient internal controls, and inadequate 11 recordkeeping present a range of additional risks that would also be prohibited for 12 any properly registered securities intermediary. For example, Kraken has at times 13 held customer crypto assets valued at more than $33 billion, but it has commingled 14 these crypto assets with its own, creating what its independent auditor had identified 15 in its audit plan as “a significant risk of loss” to its customers. Similarly, Kraken has 16 held at times more than $5 billion worth of its customers’ cash, and it also 17 commingles some of its customers’ cash with some of its own. In fact, Kraken has at 18 times paid operational expenses directly from bank accounts that hold customer cash. 19 In addition, during 2023, the independent auditor determined that issues related to 20 Kraken’s recordkeeping for customer custodial assets had resulted in material errors 21 to Kraken’s financial statements for 2020 and 2021. 22 3. Congress enacted the Securities Exchange Act of 1934 (the