Updates in payments: Will the Bank of England introduce a retail digital currency?

The Governor of the Bank of England Calls for Innovation in Retail Payments

The Governor of the Bank of England, Andrew Bailey, has expressed the opinion that in the absence of innovation from commercial banks, central banks should consider introducing a retail central bank digital currency (CBDC). This is an important step in the context of the real need to modernize payment practices aimed at increasing the efficiency of payment operations and reducing associated costs.

The Need for Modernization of Cross-Border Payments

There is no doubt that there is an urgent need to improve cross-border payments in terms of speed, costs, transparency, and accessibility. Andrew Bailey emphasized that digital technology opens up new possibilities, such as automatic fund release upon delivery of goods or the use of encryption technology to combat fraud.

Obstacles to Adopting New Technologies

However, before the full implementation of such solutions, certain obstacles need to be overcome. One of the main barriers could be market power concentration, which potentially could result in commercial banks not meeting users’ expectations and needs. Therefore, it is important to take actions to increase competition and encourage innovation.

The Bank of England Considers Introducing a Digital Currency

The Bank of England is currently considering the possibility of introducing a retail central bank digital currency, although a final decision on this matter has not yet been made. The Deputy Governor of the Bank of England for Financial Stability, Sarah Breeden, emphasized that preparatory work is justified to ensure readiness for a potential CBDC issuance, if needed.