BoE's Jon Cunliffe: Digital pound likely needed by 'end of the decade'

investmentweek.co.uk:

Jon Cunliffe (pictured), is deputy governor of financial stability at the BAnk of England, a post he will leave at the end of October 2023 after ten years.

The outgoing deputy, who is set to leave his post at the end of the month after ten years at the central bank, said in a speech at the Economics of Payments XII conference at the Federal Reserve in Washington DC that the UK will likely need a digital currency to keep up with competition in the sector, but also to maintain public confidence in money.

Bailey calls for 'public debate' on digital pound introduction

This was because new entrants to the digital currency space could offer new payments services tied to private issuers and their systems, which he argued could lead to concerns over competition and concentration.

«This may be a particular concern if ‘big tech' firms enter more deeply into payments and money. Competition and innovation may therefore be enhanced by providing a public alternative, a public digital money platform that allows private firms to offer services,» he said.

That is why Cunliffe argued the introduction of a ‘digital pound' would need to happen as a «partnership with the private sector», under a platform model where the BoE provides the digital pound and central infrastructure, while private companies would provide the interface between the central bank and users.

Such a model would mean that the BoE and the government would not be able to see individual data, rather it would be handled by private firms in a similar way banks do today, with potentially even greater protections for customers' privacy.

Yet Cunliffe reiterated that physical cash will still be available — as pledged by the UK Government — «as long as there is demand for it».

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