-
"There might be a case for digital currency," Bank of England's Bailey says
"There might be a role for a state-backed digital currency in Britain although there would be big implications ranging from the setting of interest rates to privacy," Bank of England Governor Andrew Bailey said
"It may well be that we do end up with a digital currency. It's a few years off at the moment," he added
"The use of cash was decreasing but creating a central bank-backed currency would have significant impacts on the financial system and beyond," Bailey said.
"Security, that is an issue for us. Privacy, that's a big issue, a very big issue," he said.
"Plans developed by Facebook for a digital currency set off a lot of alarm bells about access to information," Bailey said.
Earlier on Thursday, Deputy Governor Jon Cunliffe said he saw good reasons for a BoE digital currency.
British Finance Minister Rishi Sunak demanded the BoE and other regulators last month to look at the case for creating a central bank digital currency to respond to the challenge from cryptocurrencies such as bitcoin.
"Factors that were pushing up inflation would probably not persist, but the BoE would watch the situation very closely," Bailey said
"The really big question is: 'Is (higher inflation) going to persist or not?' Our view is that on the basis of what we're seeing so far, we don't think it is," Bailey said.
"We think there are reasons to think that the economy will start to bounce back this year but it can't be sustained at that level of growth," he said. "But we are watching it very carefully.... Yesterday we had a very high number for inflation in the U.S."
"There was currently no prospect of an agreement on "equivalence" of rules for the sector," Bailey said about Britain's attempts to secure a post-Brexit deal on financial services with the European Union.
He repeated his view that London should not try to get such a deal at any price.
"There's no lack of goodwill. But if this issue isn't sorted out then I'm afraid we will learn to live without equivalence, that's the reality of it." Bailey said
Officials from Britain's financial services sector say they do not expect access to the EU's markets for the foreseeable future.
William Schomberg, Reuters, Bank of England's Bailey says there might be a case for digital currency
