This is according to Sir Jon Cunliffe, who noted how online shopping and contactless payment options are becoming more popular, leading to physical money becoming harder to use. (Related: European Parliament to criminalize physical cash use by imposing limit on cash transactions.)
"Cash is likely to decline further and cash itself will become less usable in everyday transactions, for example, if internet commerce grows and if merchants increasingly accept only digital payment," said Cunliffe. "The mass shift away from physical cash to electronic payments has been very clear and is set to continue."
Cashless payments have been growing in the past decade. Payments using cards took over cash as the most dominant form of payment in the U.K. for retail in 2016. By 2021, approximately 85 percent of transactions in the country were made electronically, either through plastic or by direct bank transfers.
Nine in 10 people use contactless payments and nearly a third of all adults in the U.K. now regularly use payment apps on smartphones like Apple Pay and Google Pay.
The prevalence of digital payment options has made it extremely commonplace for retailers to reject cash payments in favor of cashless options.
"We get regular reports from members that they are finding it difficult to access and spend cash," warned Dennis Reed, director of the Silver Voices, a campaign group for the country's elderly population. "It's another isolating factor for older people and it's of great concern."
Instead of using the growing popularity of cashless payment systems as a way to galvanize the Bank of England to figure out how to make physical cash more appealing to use, Cunliffe said the central bank needs to push ahead with the development of its own central bank digital currency (CBDC) – dubbed the "Britcoin," the "digital pound" or the "digital sterling."
The Bank of England is already looking to hire a staff of as many as 30 people to develop the country's CBDC as part of the bank's effort to further research and development on a digital version of the pound sterling.
The career section of the Bank of England's website has listed openings for a "digital pound solutions architect" and a "digital pound security architect."
Ian Taylor, a board adviser for the pro-cryptocurrency trade association CryptoUK, noted that a team of 30 means the Bank of England is willing to invest a significant amount of resources to focus on the development of the digital pound. "It shows the impact it would have, and that the bank is serious about it," he said.
"At this stage, we judge it likely that the digital pound will be needed in the future," wrote the Bank of England and the British government's Ministry of Finance in a consultation paper. "It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified."
"Most obviously, what I have called the digitalization of everyday life will continue," said Cunliffe. "The growth of internet commerce or use of banking and payment apps, for example, is forecast to grow and unlikely to stop."
Despite this dire warning, the Bank of England did say that it will continue to issue cash "as long as there is any demand for it."
A significant minority of the population, representing some of the most vulnerable sectors of British society, is still heavily reliant on only using physical currency, and Cunliffe said the central bank would not abandon them.
Find more stories about digital and cashless systems at CurrencyReset.news.
Watch this episode of "World Alternative Media" as host Josh Sigurdson talks with financial advisor Tim Picciott about the coming of the cashless society.