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Read more: UK Treasury Wishing A CBDC Chef To Develop Digital Pound
Bailey, speaking in Washington, said that although the BOE was testing the concept for a retail CBDC in UK, there was no ultimate decision on its issuance.
The BOE started working on the design of Britcoin in January and said the digital currency was intended to exist alongside cash, not to replace it. Bailey repeated that a retail CBDC in UK is being discussed that is available to all end-users, but the central bank remains wary about this development.
He showed greater preference for a wholesale CBDC, which banks would use, not individual consumers. This wholesale CBDC, according to Bailey, would update the banking systems and improve digital means of paying without affecting the ability of the public to hold cash.
Bailey added that it was also in tune with recent trends in the payments landscape, where innovation has increasingly been private sector-driven. He warned of the risk of a situation where, without such commercial bank innovation, retail payment systems could end up being dominated by central banks, which he emphasized would be undesirable and was not precluded.
The BOE’s digital pound project spurs private sector innovation aimed at forcing commercial banks to update their digital means of payment. However, Bailey added that there was no timeline and no commitment to introduce retail CBDC in UK. The Bank’s main focus continues to be to ensure a range of payment options, including cash, are available and continue to work well for consumers and businesses for years to come.
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