The International Currency Association (ICA) is the voice of the currency industry, with a membership covering the design, production, manufacturing, and distribution of coins and banknotes. It is the first industry body of its kind, comprising businesses that span the entire sector. The ICA takes the occasion of the Bank of England’s consultation on its discussion paper ‘New Forms of Digital Money’ to present its position on a Central Bank Digital Currency (CBDC), particularly as it relates to cash. The ICA’s core position is that cash is essential for personal freedom and privacy, as well as social and financial inclusion, and is the only means of payment and store of value that functions as a public good. Cash is secure, safe to use, and resilient even in the case of electronic system failures.
The ICA has consistently supported diversity and freedom of choice in payment alternatives. Cash, with its unique characteristics providing societal value, is already complemented by private payment alternatives. A CBDC, however, would represent a true public innovation. The ICA monitors central banks closely as public authorities issuing digital currency, emphasizing that the future of payments should remain under public—not private—control. While e-commerce and digital transactions are increasing, electronic purchases do not necessarily require electronic payments; consumers can still pay for electronically ordered goods with cash upon delivery. However, high fees for electronic transactions highlight the need for a public digital alternative, which a CBDC could provide.
CBDCs are often described as ‘digital cash.’ The ICA outlines two key foundations for a CBDC: first, the characteristics physical cash must have to serve as ‘digital cash,’ and second, the conditions for physical cash and a public digital currency to coexist. Physical cash is a public good and universally accessible without requiring accounts or electronic infrastructure. While digital cash may never fully replicate these features, a CBDC should reflect essential aspects of cash, including private transactions, ease of use, accessibility, security, zero cost, and seamless conversion between digital and physical forms. Privacy must be fully guaranteed, protecting users such as abuse victims or protestors from leaving digital trails. Universal accessibility is crucial, with low adoption hurdles, including offline usability, simple interfaces, and inclusivity for all ages and disabilities. Maximum security safeguards are essential to protect against cyber-attacks, with rapid resolution processes for errors, accidental overspending, or scams. CBDCs should also consider long-term resilience, environmental impact, and operational continuity, while maintaining minimal or no transaction costs to users and merchants.
The ICA emphasizes that CBDCs and physical cash must coexist. A CBDC should be a digital expression of cash, respecting privacy and allowing free, flexible conversion between digital and physical forms at no cost. Digital cash should mirror cash’s universality and accessibility, including offline use with restrictions to prevent double-spending, and AML/ATF procedures must apply as they do to cash. Central banks, as trusted public institutions, should issue digital currency to ensure privacy, acceptance, and availability, while private cryptocurrency initiatives cannot guarantee such trust. CBDCs should also foster interoperability with other payment systems, including mobile wallets, ATMs, and cross-border payments, and encourage exchange networks similar to M-Pesa to maintain cash infrastructure.
In response to the Bank of England’s questionnaire, the ICA strongly affirms the importance of public access to central bank money in a digital world, emphasizing that digital purchases do not mandate digital payments. High transaction fees make public digital alternatives attractive. The ICA agrees that privacy and protection are essential, proposing that CBDCs should not compromise human rights or cash’s role in society. Digital cash must offer robust security, quick error resolution, and safeguards for vulnerable populations. CBDCs should operate in offline mode with controls to prevent multiple spending, and AML/ATF procedures should apply equivalently to digital and physical cash. The ICA highlights that digital and physical currencies must remain mutually convertible and universally accessible, promoting competition and preventing costs to users. The organization remains ready to contribute further to the discussion.
September 2021, International Currency Association
Contact: Jutta Buyse, Director General, jutta.buyse@currencyassociation.org
