Digital currency is money only available in vital or electronic forms. The news the BOE are looking into digital currency comes as the UK is set to suffer its worst recession ever after the coronavirus pandemic. In April this year, the UK’s GDP shrank by an astonishing 20.4 percent.
Mr Bailey announced the news to students in a Speakers for Schools webinar event on Monday.
He said: “We are looking at the question of, should we create a Bank of England digital currency.”
“We’ll go on looking at it, as it does have huge implications on the nature of payments and society.”
“I think in a few years time, we will be heading toward some sort of digital currency.”
Andrew Bailey has reaffirmed the UK is looking into making it’s own digital currency
In January the BOE announced it was a part of a group of major central banks weighing up developing digital currencies.
The joint research is aimed to “share experience as they assess the potential cases for central bank digital currency in their home jurisdictions”.
The group includes global financial powerhouses such as the Bank of Canada, Bank of Japan, European Central Bank, Sveriges Riksbank of Sweden, Swiss National Bank and Bank for International Settlements.
The group are looking into Central Bank Digital Currencies as Facebook develops its own cryptocurrency, Libra.
China has also spent six years developing its own CBDC in DCEP, and the group of countries have stated their desire to compete.
In a statement, the BOE said: “The group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies.”
Cryptocurrency site Coin Telegraph suggests that the UK may have an edge on European countries in developing CBDC after Brexit.
They said: “The country does not have to deal with EU bureaucracy, nor is it a part of the Eurozone.
“These factors have allowed the nation to retain its own sovereign currency — the British pound.
“If the UK decides to develop a CBDC, it could provide the British pound with some advantage over major rival currencies like the US dollar and the euro.”
UK GDP has plummeted due to coronavirus, with it shrinking 20.4 percent in April
Mr Bailey warned however that it may be some time before Britain sees digital currency.
In the webinar, he said: “The digital currency issue will be a very big issue.
“I hope it is, because that means COVID will be behind us.”