Just as major economies around the world are accelerating the promotion of central bank digital currencies (CBDCs), the UK has hit the brakes! Andrew Bailey, the Governor of the Bank of England, rarely expressed his views in public: he seriously doubts the necessity of issuing a 'British currency'. This undoubtedly poured cold water on the 'digital pound' project and cast a heavy shadow on the future of the European CBDC landscape.
Why did Bailey suddenly change tone?
Bailey's speech at the conference in Kyiv, Ukraine, was powerful: "Do we really need to create new forms of currency to benefit from payment technologies? I am not convinced."
He pointed out that, although progress has been 'smooth' at the wholesale level (i.e., between financial institutions' CBDCs), there are currently not enough advantages seen for a retail digital pound aimed at ordinary consumers. He also explicitly raised a key question:
"Are we over-regulating traditional banks and instead transferring risks to less transparent non-banking institutions?"
What key signals were released by this statement?
There are still divisions within the central bank: although the UK and the Treasury are advancing the consultation on the digital pound, Bailey's remarks suggest that the core decision-making body has not reached a consensus on retail CBDCs.
Concerns about privacy and financial stability have become the focus: the reaction from British society has been intense, with official consultation feedback exceeding 50,000 submissions. The public fears that digital currencies could become 'privacy killers', while banks worry that **in a crisis, users will massively 'move money into the central bank'**, leading to a run on deposits.
Denial of programmability: In the face of conspiracy theories about 'the government controlling how you spend your money', the British side emphasizes that the digital pound will not replace cash and does not have mandatory uses or behavioral constraints.
What about other countries in the world?
The United States is actively piloting a 'digital dollar', but has not yet made a final decision.
Russia and some East Asian countries have entered the partial testing phase and are gradually rolling out implementations.
Some countries in South America and Africa are even considering bypassing the banking system to directly promote digital currencies.
In contrast, the UK's current hesitation will undoubtedly cause it to 'fall behind' in the international competition for digital currencies.
A key consideration: Do we really need retail CBDCs?
CBDCs are hailed as 'the last piece of the puzzle to reconstruct the monetary system', but they may also be the starting point for the collision between digital authoritarianism and personal privacy.
Bailey's words pointed out the core contradiction:
"Are we putting too much pressure on the traditional banking system while neglecting the dynamic balance of the entire financial ecosystem?"
If retail CBDCs are not done well, they may not only fail to improve payment efficiency but could also create 'new financial instability factors'.
Digital currency is not a panacea, nor is it politically correct. This 'cold reflection' from the UK may remind us that the future of digital finance should not be shackled by technology, nor should it ignore the foundations of trust and freedom.
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