By Huw Jones
LONDON (Reuters) – Britain is not lagging other central banks in issuing a digital version of its currency for day-to day-payments, Bank of England Deputy Governor Jon Cunliffe said on Tuesday.
Cunliffe was pressed by lawmakers on the Treasury Select Committee on why a public consultation on a digital pound launched earlier this month had been delayed by several months.
“I don’t think we are behind other advanced economies,” Cunliffe said.
Central banks across the world are studying digital versions of their currencies to avoid leaving digital payments to the private sector as the decline of cash has accelerated in some cases due to the COVID-19 pandemic.
Financial sector officials also say a digital pound would help stay abreast of advances in payments and help keep London a competitive global financial centre.
This month the BoE and finance ministry said they were pressing on with work on a possible digital pound that was likely to enter into circulation in the second half of this decade and be held in a ‘wallet’ provided by banks, although no final decision has been made.
Lawmakers said the consultation had been expected last autumn, and asked if any disagreements held it up.
Cunliffe said there were no disagreements between the Bank and the finance ministry, and that the delay had been due to “disruptions” last autumn.
The Bank had to intervene in markets in September after a botched budget by the government sent UK government bond prices crashing.
“It’s more likely than not,” Cunliffe said, when pressed by lawmakers on whether a digital pound would go ahead.
“This could have huge benefits for the economy and society,” Cunliffe said, adding there were still questions about competition to be answered before any launch.
“This is not about here is a particular thing that needs to be done, but about opening a new frontier for people to improve payments,” Cunliffe.
Cunliffe said there was need to see how trends in technology, payments and the economy develop over the next two to three years, and whether a digital pound is technically feasible.
“Can it be built, what are the trade-offs, what’s the cost?”
One challenge will be to give people confidence in a regulated digital currency so they don’t confuse it with the cryptoasset “Wild West ecosystem out there”, Cunliffe said.
(Reporting by Huw Jones, Editing by Louise Heavens)
