Paper money has a rich history, with the first widely used paper money being issued in 7th Century China using the bark of mulberry trees. Today, the digitalization of the economy is driven by new technologies, evolving customer preferences, and further innovation. This has led to a decline in the use of banknotes for making payments, as more spending occurs online or through electronic means. The private sector is also exploring new technologies to create novel forms of money, and the Bank of England supports this innovation as long as it is safe and supported by effective regulation and public policy frameworks. Public confidence in money is crucial for monetary and financial stability, and the Bank of England aims to ensure that the money and payment services used by households and businesses are safe, effective, and adaptable to the changing needs of the economy. With the rapid changes in the payments landscape, the public sector, including the Bank of England, is considering its role in retail payments. Central Bank Digital Currency (CBDC) is being explored as a new form of central bank money for making payments. Introducing a CBDC could contribute to a more resilient, innovative, and competitive payment system, but it would also raise significant questions for the economy and financial system. The Bank of England has not yet made a decision on whether to introduce a CBDC, and if it does, it would complement, rather than replace, banknotes.
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