Bank of England Governor: Cash will continue to be provided and retail CBDC is being established for innovation

Amid growing concerns that the UK central bank’s digital currency (CBDC), Britcoin, will replace cash, Bank of England (BOE) Governor Andrew Bailey said, “The evidence shows that people do want cash, so we will continue to provide it.” Bailey’s comments reiterate what Bank of England veteran Sarah Breeden said during a Treasury Committee inquiry last year. She said: “We will make sure that cash is available wherever there is demand. We will make sure that the cash infrastructure in the financial system exists wherever there is demand – both cash and digital currencies are options.” Since the idea of ​​CBDC was first mooted a few years ago, lawmakers and citizens have been divided over its pros and cons. Supporters of Britcoin see its ability to reduce costs and risks. Opponents, however, worry that it could give the government the power to monitor people’s spending and replace cash. The Bank of England began designing a digital version of the pound in January this year. However, the BoE is still undecided on whether it will actually launch it. Bailey said he supports the bank issuing a wholesale CBDC, but is cautious about issuing a retail CBDC. He added that it is “hard to see central bank money playing an anchoring role” when it comes to retail CBDC. However, wholesale CBDCs could play a “special role for central bank money in wholesale high-value payments and settlement of payment systems.” Bailey further added that the Bank of England is building a retail CBDC for innovation. He believes that CBDC innovation should be open to the private sector and it will ensure that commercial banks modernize digital payment systems. He also pointed out that banks lack the incentive to improve efficiency in certain areas, such as cross-border payments, which “inhibits innovation.” Therefore, in the “cross-border payments area, modernization progress remains slow,” Bailey said, calling for better digital systems and “no good reason for arbitrary decisions on this issue.” (Bloomberg)