Amid growing concerns that Britain's central bank digital currency (CBDC), Britcoin, could replace cash, Bank of England (BOE) Governor Andrew Bailey has said the central bank will continue to operate for “as long as people want it”. He said he would continue to provide cash. Mr. Bailey spoke at the Group of Thirty's 39th International Banking Seminar.
According to Bloomberg, Bailey said:
“The evidence is they want it (cash), so we're going to keep supplying it.”
Mr Bailey's words echoed those made by Bank of England veteran Sarah Breeden during a Treasury Committee question last year. She said:
“We will ensure that cash is available for as long as it is required. We will ensure that the cash infrastructure of the financial system exists as long as there is demand. Cash and digital money are options. ”
Since the idea of a CBDC was first introduced several years ago, lawmakers and the public alike have been divided over its benefits and pitfalls. Proponents of Bitcoin believe that it has the ability to reduce costs and risks. But opponents worry it could give the government the power to monitor people's spending and replace cash.
The BOE began designing a digital version of the pound in January this year. However, the city board of education has not yet decided whether to actually introduce it. Bailey said he supports wholesale CBDCs for banks, but is more cautious about releasing retail CBDCs.
He added that when it comes to retail CBDCs, “it's more difficult to find an anchor role for central bank money.” However, wholesale CBDCs can play a “special role” for “central bank money in wholesale high-value payments and settlement systems.”
Bailey further added that BOE is building a retail CBDC for innovation purposes. Bailey believes that CBDC innovation should also be available to the private sector, ensuring commercial banks can modernize their digital payment systems.
Banks lack incentives to be more efficient in certain areas, such as cross-border payments, and this is “stymieing innovation,” Bailey said. Therefore, there is a need for better digital systems in “the area of cross-border payments, which has been slow to modernize,” Bailey said. “There's no good reason to be exclusive about this.”
