As confirmed by several economic outlets, including Bloomberg, Bank of England governor Andrew Bailey took part in a VTALK with students this past Monday for Speakers for Schools. When the subject of digital currency came up, Bailey said:
We are looking at the question of, should we create a Bank of England digital currency. We’ll go on looking at it, as it does have huge implications on the nature of payments and society. I think in a few years time, we will be heading toward some sort of digital currency.
The digital currency issue will be a very big issue. I hope it is, because that means Covid will be behind us.
Whilst only a short quote, there are several strands to pick up on here.
Firstly, Bailey stating that the BOE are looking into creating a CBDC is not a new revelation. I posted a series of articles in May which looked extensively at a discussion paper published by the bank days before the Covid-19 lockdown was enforced. The paper, ‘Central Bank Digital Currency – Opportunities, challenges and design‘, went as far as detailing the possible technological composition of a future CBDC. It was in 2014 when the BOE first began discussing digital currencies in their September quarterly bulletin. Six years on, those discussions have advanced notably.
Secondly, if Bailey’s assertion is correct that ‘in a few years time, we will be heading toward some sort of digital currency‘, this would align with the BOE’s Real Time Gross Settlement renewal programme. In August 2019 I posted an article that outlined what the renewal will consist of (Working in Tandem: The Reform of Payment Systems and the Advance of Digital Technology). From 2023 onwards, the bank wants renewed services of RTGS to begin coming online, and by 2025 for it to be fully rolled out and operational. – READ MORE
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