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BoE, at least 5 years away from digital Pound.

 Sir Jon Cunliffe, deputy governor of BoE, told MPs that it was his personal opinion that creating a digital currency was far more

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likely than not. His comments go further than a consultation paper issued by the Bank and the government last month, which said a digital pound was likely necessary. The Bank and Treasury are advancing their plans to create a central bank-issued digital currency, allowing consumers to access a safe form of digital payment that can be used to shop online or in stores. The currency will likely be hosted on a third-party app, and users will not hold accounts directly at the Bank of England.

The project has raised concerns that it will lead to consumers pulling out deposits from retail banks and switching them into central bank currency during a banking crisis. To ward against this risk, the Bank has said it will not pay interest on the digital pound, allowing consumers to get a better deal on retail bank accounts. It will also set an initial limit on digital pound deposits between £10,000 and £20,000, far more than the less than €2,000 the European Central Bank is considering for its digital currency. Cunliffe said that the digital pound would also bolster rather than hurt financial stability by providing another payment method outside cash and traditional banking in case of a bank run.

He said the digital pound would provide a «safe asset» for people to resort to in the event of a financial panic. « There are financial stability benefits in this area,» Cunliffe said. The Bank estimates that creating the digital pound could lead to outflows from the banking sector worth 20 per cent of all deposits.

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  1. Ted1 March 2023 at 14:29

    Implementing a digital pound will take a lot more than 5 years. Make it 12-15 for full implementation. And we are sure to see a LOT of problems when it is implemented.

    ReplyDelete
    Replies
    1. David1 March 2023 at 16:45

      If they hurry this along too much we are bound to see serious problems in the financial market. They need to look at this from many different angles and see what kinds of problems will arise and how to fix them before they happen.

      Delete

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