The introduction of a digital pound may be necessary, believes the Bank of England
The UK government said on Monday that a digital currency is likely to be needed.
Monday's statement issued by the Treasury and the Bank of England concerned the topic of introducing the digital pound, although - as it was emphasized - no decision has yet been made. The consultations will last until the beginning of June, and the decision on the possible introduction of the digital currency will be made around 2025. The earliest stage where the digital pound could go live is in the second half of the decade.
The Bank of England and the British government are seriously considering introducing a digital pound
Financial authorities said on Monday that they predict the digital pound will have a value equivalent to existing cash.
“As the world around us and the way we pay become increasingly digitized, the case for a digital pound in the future continues to grow. A digital pound would provide a new way to make payments, help businesses, maintain confidence in money and better protect our country's financial stability, Bank of England Governor Andrew Bailey said in a statement.
British authorities have said that the digital pound will be issued by the Bank of England and that neither the government nor the central bank will have access to any personal information. Access to this digital currency would be possible through digital wallets offered to consumers by the private sector using smartphones or special cards.
Other countries, including the United States, are considering similar proposals, although Federal Reserve officials have expressed skepticism about the idea and are still examining it. Governor Christopher Waller said the dollar's role as the dominant currency has little to do with technology so far.
– A digital US dollar is unlikely to dramatically change the liquidity or depth of US equity markets. It is unlikely to open up the US economy, increase trust in US institutions, or significantly deepen America's commitment to the rule of law, Waller said in a speech in October.
Currently, the New York Fed is testing the introduction of a central bank digital currency with a number of institutions, including BNY Mellon, Citi, as well as with Mastercard.
Two-thirds of central bank respondents surveyed by the Official Monetary and Financial Institutions Forum said they expect to issue a central bank digital currency within the next ten years. According to the study, its benefits include broadening access to financial services as well as improving cross-border payments.