Cunliffe addressed the need for “public money,” which the bank has been spending for over 300 years. Photo: BEN STANSALL / AFP via Getty Images
The UK will likely have to spend its own digital currency to “meet the needs of modern life,” said a senior Bank of England (BOE) official.
Sir Jon Cunliffe, deputy governor for financial stability at the Bank of England, said new technologies like stablecoins – a form of crypto-asset – could transform money and turn people away from cash.
“After watching the digital transformation of other parts of the economy, one would not bet against the next wave of technology that leads to another great transformation,” he said on the introduction of the ‘iPhone’. “
It came when Cunliffe addressed the need for public funding to keep up with innovations in the private market.
“We may not be there yet,” he said in a speech on Thursday. “But it seems likely in the UK that if we want to keep public money that is commonplace and available to citizens, the state will have to put out public digital media.” Money that can meet the needs of modern life. “
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The BOE and the UK Treasury announced last month that they were investigating a potential national digital currency on a cause of concern.
Referred to as “Britcoin” by the press, the BOE previously said that any digital currency in the UK was a new form of digital money that could be used by both households and businesses.
Interest in central bank digital currencies – often just abbreviated as CBDC – has grown out of the growth of decentralized digital currencies like Bitcoin (BTC-USD) and Ethereum (ETH-USD), which have taken the markets by storm.
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Last year, the coronavirus crisis exacerbated a long-term shift from cash to digital payments. A recent BOE survey found that 70% of respondents used less cash than they did before the pandemic.
“The pandemic and the resulting massive forced experiments in living, working and acting remotely have accelerated these trends, at least temporarily,” said Cunliffe.
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“Of course, we don’t know how persistent these changes will be when we emerge from the pandemic. However, I think it is a relatively safe bet that the experience of the past 12 months will result in a further acceleration of the transition from physical to electronic / digital money and thus a shift from public to private money. “
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The Bank of England has stated that each CBDC would be a new form of digital money that would coexist, rather than replace, cash and bank deposits. The central bank is committed to maintaining access to cash despite the decline in usage.
“I don’t think the demand for cash will go away anytime soon,” said Cunliffe. “Many still rely on it for a number of reasons.
“But cash, and with it public money, is becoming an ever smaller part of the money we use in the UK and increasingly unusable in a digital world.”
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