The Bank of England may pause its digital pound project, considering the growing interest in stablecoins. However, a final decision has not yet been taken.
Shift in Bank of England's Focus
According to a Bloomberg report, the Bank of England has shifted its priorities regarding the future of a digital pound. Previously, officials indicated the need for a digital currency, but the focus has now moved towards payment innovations that can provide similar benefits to customers. Bank Governor Andrew Bailey has expressed doubts about the necessity of a central bank digital currency, highlighting the importance of developing tokenized deposits.
Stability Issues and Stablecoin Risks
Bailey has also urged caution regarding stablecoins, emphasizing that they could threaten financial stability and traditional currencies. He noted that the lack of protections and guarantees offered by conventional bank deposits poses systemic risks. "We need to closely examine these issues from the perspective of financial stability and the very nature of money," said Bailey.
Global Trends and Responses to CBDC
Global trends indicate that several countries, including the US and South Korea, have paused their CBDC projects due to concerns about financial stability. Meanwhile, the Bank of England continues to contemplate its next steps concerning the necessity and viability of digital currencies.
While a final decision on the digital pound remains undecided, the Bank of England is exercising caution regarding new financial technologies and the risks associated with stablecoins and digital currencies.
