The Bank of England is pondering whether to abandon plans to create a 'digital pound', with governor Andrew Bailey suggesting he would need "a lot of convincing".
Bailey was speaking to the House of Commons Treasury committee in Westminster on Tuesday about various subjects, and was asked about the launch of a central bank digital currency (CBDC) after a Bloomberg report that officials were mulling whether to set aside the plans amid growing scepticism about the project’s benefits.
The BoE governor suggested his preference was for Threadneedle Street to help banks and the market to improve digital payment technology, which could lead to "huge benefits", such as smart contracts, reducing fraud, reducing costs, and improving the speed of payments to SMEs.
"That’s a sensible place to do it because that’s where most of our money is," he said.
"My view is, if that’s a success, I question why we need to introduce a new form of money."
However, Bailey said he was "not saying no" to a CBDC, but said improving commercial banks’ digital payments systems would be the best way to digitise the UK payments system, compared to a retail CBDC, or digital pound or stablecoins.
"If the work with the commercial banks is successful, I would need a lot of convincing that the use case was made."
China has launched a 'digital yuan', a retail CBDC, while the European Central Bank has indicated that its preparations for a digital euro are continuing.
Bailey also cast doubt on the need for a digital pound for consumers last month.