UK Central Bank Governor Queries the Necessity of Digital Pound

• As per Andrew Bailey, the UK has a wholesale central bank money settlement system.
• The euro-zone finance ministers recently conveyed their support for the continuing development of a digital euro.

Andrew John Bailey, the head of the UK’s central bank, is not sure about the need for the digital pound. According to recent reports, the Governor of the Bank of England recently asked the Treasury Select Committee of Parliament about the necessity of the digital pound. Andrew Bailey also conveyed a warning on the use of a digital pound for retail purposes by adding that “there are no plans to do away with cash.”

Bailey stated:

I think it’s an open question whether a wholesale digital central bank currency is needed because we’ve got a wholesale central bank money settlement system with a major upgrade… We have to be very clear about what problem we are trying to solve here before we get carried away by the technology and the idea.

The governor’s recent opinion came soon after the euro-zone finance ministers supported the continuing development of a digital euro. 

Various Approach Toward the Digital Pound

The eurozone’s finance ministers issued a joint statement on January 16. The statement contains their assistance with the European Central Bank’s extensive study of a potential digital euro.

The statement conveys: 

The Eurogroup considers that the introduction of a digital euro, as well as its main features and design choices, requires political decisions that should be discussed and taken at the political level.

The ministers further added that a digital euro must complement rather than replace cash, and offline capabilities should be explored to address a broader range of services and contribute to financial inclusion. 

Moreover, in December, the central bank of the eurozone published a second report on the status of the investigation stage of its plan to issue a digital version of the euro. The report outlines the functions of the ECB and market participants in the digital euro ecosystem. It also presents a set of design and distribution options that have recently been approved by its Governing Council.