Bank of England (BoE) governor, Andrew Bailey, raised doubt on the necessity of a digital pound soon after the European finance ministers approved continuing work on a digital euro.
The governor of the Bank of England has questioned the requirement for a full-scale central bank digital currency (CBDC), reminding up that there is existing an wholesale central bank money settlement system that has undergone a major upgrade.
While caution was expressed about the use of the digital pound in retail settings, such as for payment processing, Bailey stated that there is no plan to eliminate cash. Additionally, he said he didn’t believe retail payment systems need this modification.
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Bailey’s comments come in reaction to recent claims made by a former BoE advisor regarding the dangers and expenses of forming a CBDC as well as recent CBDC-related developments in the eurozone.
On January 16, the finance ministers of the eurozone issued a statement approving the ECB’s investigation on a potential digital euro.
Before implementing a CBDC, the Eurogroup agreed that more political discussion is required. The committee also made a point of highlighting the issues it had come across, such as issues with privacy, financial stability, and environmental impacts.
On the same day, Tony Yates, a former BoE advisor, argued that CBDCs are not worth the costs and risks in an editorial in the Financial Times. Yates also referred to the CBDCs’ initial objectives as “suspect” and questioned their motives.
Other news includes Russia and Iran exploring at the possibility of creating a new stablecoin backed by gold. A Persian Gulf token is being created by Iran and Russia to encourage cross-border trade.