By
Tolu Ajiboye
April 17th, 2024
Several nations trying to adopt CBDCs have maintained that digital currencies should only complement cash rather than outrightly replace them.
Andrew Bailey, the Bank of England (BoE) governor, has shared his thoughts on the idea of the country’s central bank digital currency (CBDC) – the digital pound. Bailey believes that there might be no need for a wholesale CBDC. According to him, his reason borders on the fact that the country already enjoys a “wholesale central bank money settlement system with a major upgrade.”
Digital Pound Is Not a Priority, Says BoE Governor
The BoE governor stated that England is not in any way trying to abolish the retail use of cash. At least, not for the time being. So, he believes that changing retail payments now will only amount to a misplacement of priorities. For him, there is no conviction that retail payments need any such upgrades at the moment. He wrote:
“We have to be very clear what problem we are trying to solve here before we get carried away by the technology and the idea.”
Additionally, Bailey’s reservation may also be due to recent comments from a former BoE adviser on the costs and potential problems of launching a CBDC.
Eurozone Countries Intensify Efforts on Digital Euro
Meanwhile, it might be noteworthy that BoE’s intention to stop pushing for a digital pound is coming at an impeccable time. Bailey’s statement came a few moments after CBDC development in the eurozone received a major boost. Finance ministers from member countries of the eurozone just recently approved work to continue with the upcoming digital euro. The ministers shared the approval via a public statement on Monday, January 16.
It is expected that the European Union EU will publish a draft law this year, that will integrate the digital euro into its laws. But that is after it must have found out from the European Central Bank, the results of its study of the potential digital euro.
For what it’s worth, however, several nations trying to adopt CBDCs have maintained that digital currencies should only complement cash. This means that they are not intended to outrightly replace fiat. Rather, they’ll offer a wider range of payment forms and improve financial inclusion.