Bank of England expands Digital Currency experiments for the extended future
The Governor of the Bank of England, Andrew Bailey, has said that central bank digital
currencies (CBDC) has been on the agenda for the Bank of England for some time and highlighted that it, if a CBDC is issued, it will have huge implications to the nature of payments in society.
Speaking at the Speakers for Schools virtual talk, Mr Bailey said at [23.45] when responding to the question of whether he thinks digital currencies will replace money as we know it in the future he said:
That is a very big Bank of England question at the moment... We are looking at the question of, should we create a Bank of England digital currency
The Governor also said though they are not ruling out issuing digital currencies, the question
... will occupy us a lot in the years to come... My best guess though is that I think in a few years we will be heading towards some sort of digital currency.
This follows the Italian Banking Association, which is made up of over 7,000 Italian banking institutions, announcing on 18 June 2020 that it was willing to participate in the CBDC work of the European Central Bank. The digital currency working group of the Italian Banking Association has already set up a working group dedicated to digital currencies with the 10 key considerations including monetary stability and full compliance with the European regulatory framework as a matter of priority and detailed work to the identification of the distribution, conservation and exchange model of digital currencies that best fits the customer's service needs.
Given there hasn't been any issue of CBDC's in Europe, but various CBDC tests and pilots including by the Bank of France and the European Central Bank, it will be interesting to see which financial institutions will overcome all the issues of issuing a CBDC and will be first to market.