“We may not be there yet. But it looks probable in the UK that if we want to retain public money capable of general use and available to citizens, the state will need to issue public digital money that can meet the needs of modern-day life,” said Cunliffe on May 13, in a speech to the Official Monetary and Financial Institutions Forum, a central bank think tank.
The Bank of England, like many of the world’s central banks, has yet to reach an official decision on whether to launch a central bank digital currency (CBDC).
In April, the Bank joined up with HM Treasury to form a joint task force to lead its research into the possibility of launching a digital pound. More recently, the Bank began advertising seven roles in a newly-formed CBDC team.
But Cunliffe stressed in his speech that there remain a multitude of risks and potential benefits to be weighed before any decision is taken.
“Introduction of a CBDC would be a very major public project which would have material implications for the financial sector, many parts of the economy and for society more broadly,” he said.
But Cunliffe also reminded listeners of the seeming inevitability of private stablecoins coming to market at scale.
“There is now the very real prospect of non-banks, including the large technology platforms or ‘big techs’, issuing new forms of digital money, such as ‘stablecoins’ for general payment purposes. These are likely to have greater functionality and lower transaction costs than the current commercial bank digital money offering and could quickly attract a large number of users,” he said.
Cunliffe said that the Bank of England would publish a discussion paper on the public policy implications of any shift away from commercial bank money to new forms of digital cash in the next few months.