Bank of England Governor Andrew Bailey has voiced skepticism regarding the need for a retail digital pound, casting doubt on the timeline and prospects of the UK launching a consumer-facing central bank digital currency (CBDC). While he supports ongoing work on a wholesale CBDC for financial institutions, Bailey remains unconvinced that creating a new form of money for public use is essential to leverage technological progress.
Speaking at a conference in Kyiv, Bailey emphasized the uncertainty surrounding the benefits of a retail CBDC and highlighted challenges such as privacy concerns, financial stability risks, and public acceptance. He questioned whether the extensive regulation of banks has inadvertently shifted systemic risks to less regulated non-bank entities. His comments come amid growing global CBDC adoption efforts, with other central banks like the European Central Bank and China advancing retail-focused digital currency initiatives.
The UK is still in the design and consultation phase for the digital pound, having gathered over 50,000 responses to a public consultation. However, Bailey’s reservations suggest a cautious, possibly delayed decision on consumer issuance, contrasting with more accelerated international developments. The wholesale CBDC aimed at interbank settlements continues to progress, reflecting a clearer use case for improving financial market efficiency.
Bailey's statements underscore the complexity of moving to a retail CBDC, including proving the incremental value over existing digital payments infrastructure, safeguarding privacy, avoiding destabilizing bank deposit flight, managing costs, and achieving widespread adoption. Ultimately, the UK’s digital currency future remains uncertain, with ongoing debate and analysis into whether a digital pound for public use is necessary or beneficial.