BoE skeptical of digital pound as eurozone backers work on digital euro
Britain is due to launch a public consultation in the coming weeks on what the legal properties of the digital pound should be – if it is determined to go ahead and launch it – which its supporters say would enable faster transactions.
Bailey told the House Finance Committee on Monday that he was unsure whether a digital pound would be needed at this point.
The bank is updating its Real Time Gross Settlement (RTGS) system, which holds the accounts of UK banks, housing societies and other institutions at the BoE.
“I think the question of whether wholesale central bank digital money is needed is open because we have a wholesale central bank money settlement system with a major update,” Bailey said.
Mr Bailey was also cautious about using the digital pound for retail purposes such as payments, adding that there were no plans to phase out cash.
“We need to be very clear about the problem we’re trying to solve here before we get carried away with the technology and the idea,” he said.
He is not convinced that retail payment systems “need this kind of upgrade right now.”
In other news, eurozone finance ministers said Monday they support continued preparatory work for a possible digital euro, which is currently being studied by the European Central Bank.
This year, the EU should publish a draft law on how the digital euro would fit into the Union’s laws.
“The Eurogroup considers that the introduction of the digital euro and its main features and design choices require political decisions to be debated and taken at the political level,” the ministers said in a joint statement.
The digital euro should complement, not replace, cash, and “offline functionality” should be explored to serve a wider range of uses and contribute to financial inclusion, the ministers said.