Britcoin will not replace cash, BOE Governor Bailey says

The BOE will supply cash ‘for as long as people want it’

LONDON, March 14 (Reuters) - Digital money will not replace cash in the United Kingdom and the Bank of England will continue to provide notes and coins "for as long as people want it", Governor Andrew Bailey said on Tuesday.

"The evidence is they (the public) do want it, so we will continue to supply it," Bailey told a panel at the Group of Thirty's 39th Annual International Banking Seminar in Washington.

The governor was responding to mounting concerns, which have spread widely across the internet, that central bank digital currencies (CBDCs) will supplant cash.

Privacy campaigners claim CBDCs will end transaction anonymity, give governments surveillance powers over the public and shut people out of the financial system.

Bailey said he did not agree with the claim that CBDCs would end cash.

"I don't think that's true at all. I think cash will be around for a very long time to come," he said.

"People do value cash. It's the only form of central bank money that is available to the general public, and we will continue to supply it for as long as people want it."

Work has started on a digital version of the pound, dubbed Britcoin, but the BOE has yet to decide whether to launch one.

In Washington, Bailey indicated that while the BOE is cautious about releasing a retail CBDC that would function like cash for general consumers, he is in favour of a wholesale CBDC used by banks.

On the prospect of a retail CBDC, he said it was "harder to see an anchor role for central bank money."

However, there is a good case for a "special role" for "central bank money in wholesale high value payments and in settlement of payment systems", he said.

The BOE is developing a retail CBDC not because it plans to deploy it but to ensure innovation is available to the private sector and to ensure commercial banks modernise the digital payments system.

Digital payment systems are particularly needed in the "area of cross-border payments, where progress on modernisation continues to be slow," Bailey said.

"There is no good reason to be proprietorial on this."

Banks have little incentive to speed up cross border payments, which potentially "inhibits innovation", he said.