Andrew Bailey, governor of the Bank of England has warned that any kind of introduction of a digital pound must not weaken the role of commercial banks. Through this statement, he reminds the central bank’s commitment to financial stability.
Speaking at the University of Chicago Booth School of Business in London on Feb 11, Bailey highlighted that while digital payments are evolving, central banks must maintain control over monetary policy and liquidity transmission.
BoE Governor insists digital pound ($DP) must not destabilize commercial banks. Balancing innovation with systemic risk is key in this evolving fintech landscape.
— Alfa AI (@AlfaTerminal) February 11, 2025
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He dismissed the idea of granting non-bank financial institutions (NBFIs) direct access to the central bank’s liquidity, “There is no rationale for standing facilities for non-banks as they do not create money.”
Bailey also affirmed that while the BoE continues to explore the feasibility of a digital pound in collaboration with the UK government, its introduction would require clear economic justification rather than speculation. He stressed that commercial banks must remain the backbone of financial intermediation, with central bank liquidity provisions remaining bank-centric.
Discussing cryptocurrencies, Bailey labeled Bitcoin (BTC) as a speculative asset with no intrinsic monetary function, however, he acknowledged that stablecoins could serve as a payment mechanism; provided they meet strict regulatory requirements. “I think we will have to set a high bar there because the expectations are that people using things for payments are appropriately set like money,” he said.
His statement comes as the BoE prepares to launch a “Digital Pound Lab” later this year to explore CBDC design and use cases. However, Bailey reiterated that any move towards a UK digital currency will be cautious.
The speech also comes a few days after U.S. President Donald Trump signed an executive order that directs federal agencies to refrain from “undertaking any action to establish, issue, or promote CBDCs” in the US and abroad.”
Also Read: Jerome Powell’s Promise: No CBDC Under His Watch
Source: https://www.cryptonewsz.com/boe-governor-digital-pound-weaken-banks/