The Bank of England (BoE) is reluctant to press ahead with the creation of a digital form of money available to the general public because of the risk that commercial banks will not be able to keep up with less regulated technology companies, it has said. Governor Andrew Bailey. Saturday.
Bailey’s comments echo his long-standing concern that he doesn’t want everyday payments or banking-style services to shift to cryptocurrencies or tech companies that are less secure or private than banks.
The BoE and the British Treasury have said they will not make a final decision on whether to go ahead with a government-backed digital note, or central bank digital currency (CBDC), until 2025, after joint advice that raised widespread privacy concerns.
“This (CBDC) is not my preferred option, but we cannot rule it out,” Bailey told the Group of 30 in Washington, a forum of representatives of central banks and commercial banks.
While Britain’s electronic payments infrastructure already enables fast transfers with no upfront cost to citizens, future forms of digital currency could offer more opportunities in areas such as automated payments.
“Commercial bank money, ie the banking system, is the best home for these innovations,” Bailey said. “But is this the only solution? At the Bank of England, we continue to prepare for CBDC sell because, frankly, we don’t see enough evidence yet that innovation will happen in the commercial banking system.”
The initiative is part of a global movement to explore and develop digital currencies to modernize financial systems and accommodate the growth of the digital economy.
Bailey said commercial banks may be turning away from innovation because they have benefited too much from the current system. “To put it bluntly, if the rents from the ‘rails’ (payment systems) are stifling innovation and stifling competition, that’s why we need a retail CBDC,” Bailey said. .
2024-10-27 21:22:00
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