The Bank of England may postpone its digital pound issuance plan due to doubts about the project's benefits.
Interest in government-issued cryptocurrencies is declining globally. The Bank of England is encouraging the banking sector to accelerate payment innovation instead of launching the CBDC immediately.
MAIN CONTENT
The Bank of England is considering halting its digital pound issuance plan after doubts about its effectiveness.
The bank suggests the private sector take the lead in innovating payment technology.
CBDC remains a backup option if the benefits from private solutions do not meet expectations.
How does the Bank of England respond to doubts about the digital pound?
The Bank of England (BoE) is considering postponing the issuance of the digital pound after doubts about the actual benefits of this currency have increased. According to close sources, the BoE proposed that the banking sector enhance creativity in electronic payments to achieve similar goals without resorting to CBDC.
This indicates that the BoE wants to leverage private innovation capabilities before intervening with a government digital currency. However, the bank retains the right to issue CBDC when necessary to ensure flexibility and timeliness in the future.
Promoting private payment technology is currently a priority to ensure efficiency and speed. If the benefits from these solutions are insufficient, we will utilize the right to issue CBDC as a support tool.
Andrew Bailey, Governor of the Bank of England, 2024
Why is interest in government-issued cryptocurrencies declining globally?
The cooling interest in government cryptocurrencies stems from skepticism about actual impacts and implementation costs. Many countries see rapidly developing private financial technologies providing convenient and safe payment solutions, diminishing the appeal of CBDC.
The rapid development of digital wallets, contactless payments, and the DeFi ecosystem contributes to innovations that meet social demands without direct state control. This is also why the Bank of England relies on the private sector to initiate rather than issuing the digital currency itself.
How does the Bank of England maintain its CBDC plan in the current context?
Although it is considering halting or postponing the public issuance of the digital pound, the Bank of England still retains the ability to issue CBDC if necessary. When private innovation does not sufficiently meet payment benefits, this policy allows the Bank to protect the national financial infrastructure.
This flexibility reflects the BoE's precautionary strategy based on risk and benefit analysis, aligning with global trends as many central banks prioritize market observation and thorough considerations before implementing CBDC.
Central banks must be ready to act or withdraw depending on changing market conditions to protect national interests and consumer rights.
Andrew Bailey, Governor of the Bank of England, 2024
How are other countries around the world developing their government digital currencies?
Many central banks globally are in the experimental phase and considering deploying government cryptocurrencies. However, they simultaneously place trust in promoting payment innovation from the private sector to leverage innovative solutions, reduce operational costs, and legal risks.
The IMF's 2023 report indicates that about 80% of central banks are researching or developing CBDC, but most have not officially issued it yet. This reflects caution in assessing the benefits and impacts on the financial system.
What specific actions has the Bank of England proposed for the financial sector?
According to internal sources, the Bank of England has urged financial institutions to accelerate the development of advanced electronic payment technology. They want the banking sector to provide many safe, efficient alternatives to avoid dependence on government-issued cryptocurrencies.
This is a strategic move to harness the digital innovation strengths of the private sector, enhancing competition and improving the payment experience for end users.
Comparing the benefits between the digital pound and private payment technologies
Criteria Digital Pound (CBDC) Private payment technology Security Controlled by central banks, high reliability. Depends on the technology of each provider, diverse security options. Technological innovation Depends on the progress of development and government approval. Rapidly developing, flexible according to market needs. Operating costs High development and maintenance costs, funded by the state. Costs borne by enterprises, usually gradually decreasing due to competition. Impact on the financial system Creates stabilization tools, direct control. Promotes diversification, competition, and innovation in services.
Frequently Asked Questions
Will the Bank of England officially cancel the digital pound project?
Currently, the bank is only temporarily postponing the plan and still retains the right to issue CBDC for use if necessary; the project has not been completely canceled.
Why is the private sector encouraged to develop payment technology?
Private enterprises can innovate quickly, effectively meeting market demands without direct government intervention.
What advantages does CBDC have over current payment technology?
CBDC offers financial stability, strict management, and high security as it is controlled by the central bank.
What benefits will users gain if the banking sector develops payment technology?
New technology facilitates faster payments, more convenience, and reduces transaction costs for individuals and businesses.
Will other banks follow the trend of postponing CBDC?
Many central banks globally are also cautiously researching and prioritizing market observation before deciding to issue CBDC.
Source: https://tintucbitcoin.com/ngan-hang-anh-co-the-hoan-digital-pound/
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