UK sterling banknotesInternationalIndiaAfricaWeighing in on the evolution of payments back in June, 2021, Victoria Cleland, Executive Director for Banking, Payments and Innovation of the Bank of England, stated that the world had moved on “from a time where cash was king,” and insisted that digital money could, “contribute to faster, cheaper, and more efficient payments.” In the coming years it will be become increasingly more challenging to spend paper money amid the overwhelming shift to electronic payments, the Bank of England has underscored. In light of this trend, it is imperative to be prepared for that contingency, and develop an electronic version of the pound sterling, the bank’s deputy governor told the Innovate Finance Global Summit (IFGS) at London’s Guildhall.As he expounded upon what he called was a “very clear” move away from physical bank notes to embrace electronic payments, Sir Jon Cunliffe said:
"Cash is likely to decline further and cash itself will become less useable in everyday transactions, for example if internet commerce grows and if merchants increasingly accept only digital payment."
Developing a digital pound is what could shore up future confidence in the financial system, insisted Cunliffe.If we look at the timeline of the evolution of payments in England, in 2010 at least 56 percent of such transactions were made using physical cash. In 2015, this number had dropped to 45 percent. In 2016 card payments rose to dominance in the retail sector, according to the bank. In a matter of about five years, card payments and bank transfers and made up 85 percent of payments. The BoE has predicted that by 2028 no more than 9 percent of all payments will be made using paper bank notes. Currently, around 90 percent of people resort to contactless payments, it was emphasized at the IFGS, and close to a third of Britain’s adults have become used to relying on Apple Pay, Google Pay and similar apps for making mobile payments.“Most obviously, what I have called the digitalisation of everyday life will continue. The growth of internet commerce or use of banking and payments apps, for example, is forecast to grow and unlikely to stop,” Cunliffe said.According to the bank, despite the fact that more and more shops in major cities are adapting to the cashless trend, while there is still a demand for physical bank notes they will continue to be issued.The warning regarding the move away from physical cash echoes the words of Victoria Cleland, Executive Director for Banking, Payments and Innovation of the Bank of England, made in 2021.”New forms of digital money could contribute to faster, cheaper, and more efficient payments and have financial inclusion as a prominent design consideration,” Cleland had said in a speech on June 21. WorldChina’s E-Yuan Could Be ‘Largest Threat’ to West, as US Slow to Develop Digital Dollar – Report26 July 2021, 00:36 GMTVictoria Cleland’s words had come as the European Central Bank (ECB) had been working on a digital currency since 2020. “A CBDC (central bank digital currency) would, if introduced… be a new form of central bank digital money issued by the Bank of England for use by households and businesses. Importantly it would co-exist alongside cash, commercial bank deposits, and core payments infrastructure such as RTGS (Real Time Gross Settlement service),” the Executive Director for Banking, Payments and Innovation of the BoE had stated in 2021.Since that time, the bloc has been getting closer to the digitalization of the euro. The European Commission is due to propose a legal framework for the central bank digital currency (CBDC) by May 2023. EconomyHow EU Pushing Ahead With Digital Euro Amid De-Industrialization and US Protectionism20 February, 15:04 GMT