The Bank of England’s deputy governor Jon Cunliffe reportedly said that England’s central bank was not going to ensure that mainstream banking business would remain relevant or not when future digital currencies launch. Cunliffe said in a report:
Our job is not to protect bank business models.
Banks will have to adjust. Our job is to ensure that if bank business models change, we manage the financial and macro-economic consequences of that.
Central bank digital currencies, or CBDCs, do not require middlemen service, one that commercial banks provide. Meaning CBDCs could impact the solutions that traditional banks now offer, including people’s willingness to hold money in bank accounts.
In addition to this, Cunliffe implied that governments across the globe must prioritize discussions around CBDCs:
They need to go up the political agenda quite fast before the political side discovers there are developments in the private sector that actually don’t fit with policy.
In the months following COVID-19, several central banks announced updates with regard to their CBDC projects. In February, some banks had held a discussion about digital currencies on the sidelines of an IMF conference. Whilst, early last month, central banks from certain nations had issued a report with the Bank for International Settlements, which highlighted potential collaborations on their respective CBDCs.
So far, China has been the most active in pursuing its CBDC project, the digital yuan. In fact, the Governor of the central bank of China, Yi Gang, had recently declared that in its pilot program, the digital yuan has been used in over four million transactions totaling more than 2 billion yuan (about $299 million) to date.
Meanwhile, in the US, the Federal Reserve is still exploring the potential impact of a digital dollar on commercial banking and its monetary policy. Moreover, the race to be the first to issue a CBDC does not seem to worry the US either. In Europe, the ECB does not plan to decide whether and how to launch a digital euro until at least mid-2021.