Amid growing fears that Britcoin, the UK’s central bank digital currency (CBDC), is going to supplant cash, Bank of England (BOE) governor Andrew Bailey said that the central bank will continue to supply cash “for as long as people want.” Bailey was speaking at the Group of Thirty’s 39th Annual International Banking Seminar.
According to Bloomberg, Bailey noted:
“The evidence is they do want it [cash], so we will continue to supply it.”
Baileys words were a reiteration of what Sarah Breeden, a Bank of England veteran, said at a questioning by the Treasury Committee last year. She had said:
“We will ensure that cash is available as long as it is demanded. We will ensure that the cash infrastructure in the financial system is there as long as it is demanded – cash and digital money are choices.”
Ever since the idea of the CBDC was first introduced years ago, lawmakers and citizens alike have been divided over its benefits and pitfalls. Those who support Britcoin believe that it has the capacity to reduce costs and risks. Those opposed, however, are concerned that it could give the government the power to surveil people’s expenditures and replace cash.
The BOE started working on the design for a digital version of the pound in January this year. However, the BOE has still not decided whether it is actually going to launch it. Bailey said that he supports a wholesale CBDC for banks but is more cautious about releasing a retail CBDC.
He added that it was “harder to see an anchor role for central bank money” when it came to retail CBDC. However, a wholesale CBDC can play a “special role” for “central bank money in wholesale high value payments and in settlement of payment systems.”
Bailey further added that the BOE is building a retail CBDC for innovation purposes. Bailey believes that the CBDC innovation should be available to the private sector and it will ensure that commercial banks modernize the digital payments system.
According to Bailey, banks lack the incentive to increase efficiency in certain fields, like cross-border payments, which “inhibits innovation.” Therefore, there is a need for better digital systems in the “area of cross-border payments, where progress on modernization continues to be slow,” Bailey said. “There is no good reason to be proprietorial on this.”
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