Governor Bailey prefers private innovation in payments over a state-backed digital currency.
According to internal sources cited by Bloomberg, the Bank of England is considering permanently scrapping its plans for a central bank digital currency (CBDC). Leadership at the BoE is reportedly increasingly doubtful about the real usefulness of a state-issued digital pound for the UK’s financial system.
Behind the scenes, central bank officials are encouraging commercial banks to speed up their own innovations in digital payments rather than advancing a government-issued CBDC.
During a parliamentary hearing before the Treasury Committee, BoE Governor Andrew Bailey publicly voiced his concerns. “If that’s a success, I question why we need to introduce a new form of money,” Bailey said, adding that moving forward with a CBDC would require “a lot of conviction.”
This stance marks a sharp shift from his 2023 comments, when Bailey stated that “a digital pound will be needed in the future”, referring to the joint efforts between the Bank of England and the UK Treasury.
According to the Atlantic Council’s tracker, the UK’s CBDC project is still officially in the development phase. No final decision has yet been made on whether to proceed.
The project has faced numerous challenges, including criticism from members of Parliament and more than 50,000 mostly negative public comments during the consultation process. The strongest resistance stems from concerns over consumer privacy and the risk of destabilizing the banking system during financial crises.
Additional worries focus on potential threats from foreign or Big Tech-issued stablecoins, which could undermine the international standing of the British pound.
