Is the Bank of England’s digital currency coming soon? The cause is not just the outbreak that reconstructs the payment pattern.

Several foreign financial media, including Bloomberg, confirmed that bank governor John Bailey said last Monday when it came to digital currencies: The question we are looking at is whether we should create a Bank of England digital currency. We will continue to study it because it has a huge impact on payment and the nature of society. I think in a few years we’re going to go towards some kind of digital currency.

Although it’s a brief quote, here are a few clues to note.

Is the Bank of England's digital currency coming soon? The cause is not just the outbreak that reconstructs the payment pattern.

First, Mr Bailey’s claim that the Bank of England is studying the creation of a CBDC is nothing new. In 2014, the Bank of England discussed digital currencies for the first time in its quarterly bulletin in September. Six years on, these discussions seem to have made some useful progress.

Second, if Mr Bailey’s assertion is correct, “in a few years we will move towards some sort of digital currency”, which would be in line with the Bank of England’s real-time total settlement update programme. Starting in 2023, the Bank of England wants to restart its RTGS service, known as Real Time Settlement Gross, in real-time full billing, to be fully available by 2025.

Consider this happening in the Bank for International Settlements’ “Innovative 2025 BIS 2025” initiative, a “centre” that aims to bring all major central banks together in the name of technological innovation.

Given that the information released so far by the Bank of England may include distributed ledger technology and blockchain, RTGS’s “update” will allow banks’ payment systems to “interact with new payment technologies”.

The World Bank needs to reform its system if it is to introduce a public-facing CBDC, and that is what is currently under way.

Third, Bailey acknowledged that the introduction of CBDC would have “a huge impact on payment and the nature of society.” On the paymentside side, the Bank of England is pushing for CBDC issuance to be a “supplement” to cash. That does not mean cash will be withdrawn from circulation, they said. But BIS managing director Agustin Carstens made it clear in 2019 that in the CBDC world, “there will be no more cash paymentoptions.” “All purchases will be made electronically.

The trend of digital payments over cash has been around for years. My view is that the Government will not simply ban cash, but will allow the use of paper money until the cost of maintaining the cash infrastructure exceeds the amount of cash still in circulation and is used. They will take a gradual approach, rather than grabbing money from the public. From the uk’s point of view, it would be better for people to decide to stop using cash themselves rather than imposing that option on the public.

The social aspect is equally serious, as those who rely on cash find that access to cash is becoming increasingly limited. In rural Communities in the UK, in particular, some rely entirely on local post offices to withdraw money. As the post office network itself comes under increasing pressure, these conditions only get worse.

It was also reported this week that more than 7,000 ATMs had been shut down across the UK as a result of social isolation measures imposed during the outbreak, which accounts for almost 10 per cent of the UK’s ATM network. Some of these ATMs are not yet in use, especially in supermarkets and some bank outlets. Similarly, some branches remain closed after four months of confinement, while those open are only allowed to enter at a time.

Finally, Bailey commented, a question worth pondering is why it is necessary to establish CBDC now that the outbreak is over. The possible answer lies in the changes in lifestyle in the wake of the crisis, which have a direct impact on the agenda set by the World Economic Forum, which includes blockchain, the financial and monetary system, the digital economy and new value creation.

Life can’t go back to before the outbreak, including our relationship with money. In the near future, international institutions such as the Bank for International Settlements will soon begin to reaffirm the cashless agenda. In April, they published a report entitled “The Future of Outbreaks, Cash and Payments” (cash, and the future of the future), which states:

In the context of the current outbreak crisis, CBDC is designed to provide access options for non-bank accounts and accessible (contactless) technology interfaces for all citizens. Attention to the value of the various means of payment and the need for any means of payment to withstand a wide range of threats is therefore necessary.

  The banking elite hopes that CBDC’s payment system will not fall far behind once the global payment system is reformed. Judging by their own timetables, CBDC’s global network is viable by 2025. The more people who don’t use cash today, the better for those who want to move from tangible to intangible.