2017/06/14

Could our cash become digital? Bank of England's chief cashier says it is considering launching official digital currency in the future


The Bank of England is considering whether to launch an official digital currency, its chief cashier revealed yesterday.

During a speech in London, Victoria Cleland said the rise in technology means there are now a 'myriad of ways to pay'.

This has led officials at Threadneedle Street to explore whether to move away from just issuing traditional paper notes.


Ms Cleland said there was a 'growing interest in non-monetary based exchanges', adding: 'And we have even considered whether there might be a Bank of England issued digital currency, but do not envisage this in the foreseeable future.'

At the moment, the Bank of England provides electronic accounts to banks and key financial institutions, but the public can only hold central bank money in physical form – as banknotes.

If it did decide to issue a digital currency everyone, including businesses, households and financial institutions other than banks, could store value and make payments in electronic central bank money in addition to being able to pay with cash.

The best known example of digital currency is Bitcoin.

It allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties.

Bitcoins can be bought with near anonymity, which supporters say lowers fraud risk and increases privacy.

But critics say that also makes Bitcoins a magnet for drug transactions, money-laundering and other illegal activities.

A boom in online shopping and the increasing popularity of contactless cards means households are less reliant on cash than ever.

It has prompted some experts to predict the demise of cash.

Despite the rise of new technology, Ms Cleland insisted the future of cash is not under threat, declaring that 'it is clear that cash is very much alive and kicking.'

She revealed the value of notes in circulation reached over £70billion in the run up to Christmas, up 10 per cent from a year earlier and the fastest pace of growth for a decade.

This compared to £2.9billion when the first cash machine was installed in Enfield, North London almost exactly fifty years ago.

Although the number of cash payments fell 11 per cent to 15.4 billion between 2015 and 2016, cash remained the most frequently used payment method, accounting for 40 per cent of all payments.

Referring to the recent launch of the £5 polymer note, featuring Sir Winston Churchill, Ms Cleland said 'technology is not a threat to cash - it provides opportunities'.

But she warned the cash industry 'should not be complacent', and must respond to the rising popularity of other forms of payment by keeping prices competitive and continuing to innovate.

One in 20 UK adults relies almost entirely on cash to make day-to-day payments, she said.

She said cash is also 'valued as a budgeting tool' and carried by people just in case they cannot get an internet connection to make an online payment or cash is not accepted.

The new polymer £10 note featuring author Jane Austen will be launched in September. 

No comments:

Post a Comment