UPDATE 1-Bank of Englands Cunliffe sees strong case for the UK digital currency
LONDON, May 13 (Reuters) – Bank of England Deputy Governor Jon Cunliffe said Thursday he could see good reasons for the BoE to issue its own digital currency, although no decision has been made yet.
Cunliffe said the coronavirus pandemic had accelerated the shift from “public” cash issued by the BoE to “private” money created by BoE-regulated banks and used for online transactions and credit and debit card payments became.
“We may not be there yet, but it seems likely in this country that the state will have to spend public digital money if we are to keep public money that is general and available to all citizens,” he said in a speech in front of the think tank of the central bank of OMFIF.
Last month, Treasury Secretary Rishi Sunak urged the BoE and other regulators to look into creating a central bank digital currency nicknamed “Britcoin” to respond to the challenge posed by cryptocurrencies like Bitcoin.
While banks and some large payment processors have long been able to hold money directly with the BoE and use it to make payments among themselves, the public is increasingly relying on banks and other payment providers for almost all transactions.
Cunliffe said the payments infrastructure is currently in a “Blackberry” stage and could easily be disrupted by an equivalent of Apple’s iPhone, which was much more appealing than its more business-centric predecessor.
Leaving innovation to the private sector, however, runs the risk of payments being dominated by one or two private companies, but this has potential cost and privacy implications, Cunliffe warned.
British politicians would have to decide how much privacy there would be for a central bank digital currency, Cunliffe said. However, he warned that it was unrealistic to have a digital currency that was as anonymous as cash, but did not pose unacceptable security risks. (Reporting by David Milliken, editing by Andy Bruce)