Digital currency will not replace cash in the UK, according to Bank of England Governor Andrew Bailey, who assured that notes and coins will remain available as long as there is demand. Bailey made these remarks during a panel discussion at the Group of Thirty’s 39th Annual International Banking Seminar in Washington.
He stated, “The evidence is they do want it, so we will continue to supply it,” addressing widespread concerns that central bank digital currencies (CBDCs) might eventually replace cash. Privacy advocates suggest CBDCs could eliminate transaction anonymity, enable government surveillance, and exclude individuals from the financial system.
While the Bank of England has initiated work on a digital version of the pound, termed Britcoin, it has yet to determine whether to officially launch it. In Washington, Bailey expressed caution regarding introducing a retail CBDC intended for general consumer use, preferring instead a wholesale CBDC for use by banks.
Bailey mentioned that a retail CBDC might not serve as a significant anchor for central bank money, while there is a compelling argument for central bank money to have a special role in wholesale high-value payments and in the settlement of payment systems.
The BOE’s efforts in developing a retail CBDC focus on ensuring innovation in the private sector and encouraging commercial banks to modernize the digital payments system. Bailey highlighted the necessity of digital payment systems, particularly in the cross-border payments sector, where modernization efforts progress slowly. He noted, “There is no good reason to be proprietorial on this.”
Bailey observed that banks have limited motivation to expedite cross-border payments, which may hinder innovation in digital payment systems.
