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Bank of England Governor: Digital money is the future, but banknotes still useful



In a recent speech, the governor of the Bank of England expressed that digital money will play a significant role in the future evolution of currencies. However, he also emphasized the continued need for producing cash notes in England, ensuring accessibility for those who require them.

“The Bank has made clear that we will continue to produce bank notes, and under the new Financial Services and Markets Act, the Bank of England and FCA will have new powers to ensure the future effectiveness, resilience, and sustainability of the cash system,” he said. “Cash is here to stay.”

Furthermore, the governor mentioned ongoing investigations into the potential implementation of a retail central bank digital currency (CBDC) in collaboration with the Treasury. He highlighted the importance of engaging the public throughout the project.”

The responses from the consultation will be thoroughly reviewed and publicly addressed in due course, providing valuable input for their work.

The Bank intends to continue engaging with the public and fostering discussions beyond the consultation phase as they move closer to deciding whether to proceed with a retail CBDC. The Bank emphasizes that it will not compromise people’s privacy.

Concerns about digital currencies

In discussing the bank’s concerns and the global changes in money, the governor emphasized two key principles that the Bank of England considers when contemplating digital currencies: the singleness of money and the finality of settlement.

The recent failures of banks in the US and Switzerland have raised doubts about the singleness of money and the measures required to maintain confidence, according to the governor.

He further stated that crypto assets are currently volatile and not a robust financial instrument for the general public. He also highlighted that central banks are best positioned to provide the safest form of money for public use, whether it is cash or digital.

However, achieving a successful, innovative system requires engagement and innovation. The governor stressed the importance of avoiding a failure of imagination and promoting innovation that streamlines and enhances the productivity of critical parts of the financial system.

Future money roadmap for the UK

In anticipation of the future of the financial system in the UK, the leader of the apex bank announced plans to introduce a new settlement engine by 2024. The goal is to establish a platform for change and enhanced digitalization.

The Bank of England aims to revolutionize the productivity of the financial system, particularly in the areas of settlement and custody. To achieve this, the bank will need to renew its Real-Time Gross Settlement (RTGS) system. 

This renewal will enable the integration of central bank digital money in RTGS with tokenized transactions, resulting in the fastest and most efficient route.

Read also; 
Crypto ATMs Under Fire: UK FCA Shuts Down 26 in Coordinated Crackdown


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