Shortly after eurozone finance ministers endorsed continuing development on a digital euro, Bank of England (BoE) governor Andrew Bailey raised doubt over the necessity of a digital pound.
A joint group of Europe’s finance ministers called the Eurogroup released a statement on January 16 supporting the European Central Bank’s ongoing study of a future digital euro. However, the Eurogroup acknowledged that further political discussion is necessary before a CBDC can be implemented. The committee also emphasized the problems it had noticed, such as privacy concerns, financial stability, and environmental consequences.
The governor of the Bank of England has questioned the necessity of a wholesale central bank digital currency (CBDC), pointing out that a wholesale central bank money settlement system already exists and has undergone a significant improvement.
Bailey added that there are no plans to end the use of cash in retail establishments. Retail payments do not now require modification, according to the BoE governor.
Before authorities become distracted by the notion and the technology, they must be extremely clear about the problem they are trying to tackle.
Bailey’s remarks come in response to previous remarks on the costs and hazards of building a CBDC by a former BoE adviser and recent developments involving CBDCs and crypto regulation in the European Union.
The Bank of England recently responded to many inquiries on a $244,000 contract to develop a proof-of-concept (PoC) central bank digital currency (CBDC) wallet.
It asserts that it intends to create a mobile wallet app, a shop website, and a back-end server for a core ledger. However, the bank clarified that it has not yet committed to developing a sample wallet and will only use the PoC to deepen its understanding.
On the other hand, Iran and Russia are working together to develop a gold-backed stablecoin to facilitate cross-border trade. Currently, Astrakhan is a free-trade zone where Russia has started accepting Iranian merchandise; therefore, the coin would be usable there.