Bank of England sceptical of digital pound as euro zone backs work on digital euro
- Bank of England Governor Andrew Bailey said a central bank digital currency should solve a clearly defined problem, noting the UK has wholesale settlements
- Euro-zone finance ministers on Monday said they backed continued preparatory work for a potential digital euro, now being studied by the European Central Bank
Bank of England Governor Andrew Bailey questioned the need for a digital pound on Monday just as euro-zone finance ministers backed further preparatory work on a digital euro.
Britain is due to launch a public consultation in coming weeks on what should be the legal attributes of a digital pound – if it was decided to go ahead and launch one – which backers say would mean faster transactions.
Bailey told parliament’s Treasury Select Committee on Monday that he was not sure if a digital pound was needed for now.
The bank is updating its real-time gross settlement system (RTGS), which holds the accounts of Britain’s banks, building societies and other institutions at the BoE.
“I think it’s an open question whether a wholesale digital central bank currency is needed because we’ve got a wholesale central bank money settlement system with a major upgrade,” Bailey said.
Bailey was also cautious about a digital pound for retail use such as for making payments, adding there is no plan to abolish cash.
“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,” he said.