• Bank of England Governor Andrew Bailey has shared his thoughts on the idea of a country’s central bank digital currency, the digital pound.
• Bailey believes that there might be no need for a wholesale CBDC as England already enjoys a “wholesale central bank money settlement system with a major upgrade.”
• Bailey also stated that England is not trying to abolish the retail use of cash, suggesting that changing retail payments now would be a misplacement of priorities.
The Bank of England is reconsidering its plans to implement a digital pound, as other nations are making major progress in the field of central bank digital currencies (CBDCs). Governor Andrew Bailey recently shared his thoughts on the digital pound, expressing his belief that a wholesale CBDC might not be necessary.
Bailey noted that the country already enjoys a “wholesale central bank money settlement system with a major upgrade.” He also stated that England should not be trying to abolish the retail use of cash, as doing so would be a misplacement of priorities. Several nations trying to adopt CBDCs have maintained that digital currencies should only complement cash rather than outrightly replace it.
The Bank of England is not the only central bank that is exploring the possibility of launching a digital currency. The European Central Bank (ECB) and the Bank of Japan (BOJ) are also looking into issuing their own digital currencies. These projects are in varying stages of development and have different goals.
The ECB’s project is aimed at creating a digital euro that can be used for payments and investments, while the BOJ’s project is more focused on creating a digital yen that can be used as a store of value. Both projects have received positive appraisals from central bankers, with ECB President Christine Lagarde hailing the potential of the digital euro and BOJ Governor Haruhiko Kuroda emphasizing the potential of the digital yen.
However, the Bank of England is not as enthusiastic about the idea of a digital pound. Governor Bailey has expressed his belief that the current system of cash and card payments is adequate and that a digital pound would not be necessary. He also noted that the bank is not looking to replace cash but rather to improve the current system.
The Bank of England’s decision to backtrack on the digital pound comes as other nations are making major progress in the field of CBDCs. China has already launched its digital yuan and is actively testing it, while other countries such as France, Italy, and Japan are close to launching their own digital currencies.
It remains to be seen whether the Bank of England will ultimately decide to pursue a digital pound or if it will continue to focus on improving the current system of cash and card payments. Whatever the case, it is clear that the global CBDC landscape is changing and the Bank of England will have to make a decision soon.