Or how the advances in the functionality of the smartphone, as most recently seen during the pandemic, would transform daily lives. But while we cannot know with certainty how current trends in payments and technology will play out, it would be complacent to assume that developments in money and payments will end with the status quo. There are already in existence new digital technologies that are being applied to the digital representation, transfer and storing of money like obligations. These offer the prospect of new possibilities in the way money and payments can be configured to interact with digital processes. Programmable money, for example, could enable the development of smart contracts which carry out specific actions based on pre-defined actions and conditions[5]. Moreover, money and payments are no longer the exclusive province of banks. New, non-bank players have already been successful in providing innovative payment services. Looking forward a wide range of non-bank payment firms, including bigtechs and some players from the crypto universe, are becoming increasingly interested in the possibilities of these new technologies in money and payments. Our assessment that a digital pound is likely to be needed is grounded first in the view that further decline in cash use and further development in the digitalisation of money and payments is likely and second in the view that these developments raise important questions to which the Bank of England and the Government should respond.
This increase is believed to have been adequate to supply the demand of the economy for money under the conditions of an economic growth of 6 percent and of an inflation rate within the two-to-four percent targeted range. Money supply and the closest money aggregate (M1) have known faster growth rates during 2004 compared to year 2003. This is a consequence of a rising demand of the economy for monetary assets, reflected even in the invigoration process of lending to the economy throughout the year. Also, the controlled inflation level has rendered possible the maintenance of a real interest rate in positive terms, despite the ongoing reduction of nominal interest rates. The real positive interest rate has maintained the tendency of households to deposit their savings in the banking system, bringing about further reductions of the relative level of currency outside banks that circulates in the economy. The rising demand for monetary assets has been shaped mainly as the demand for monetary balances in Lek. The demand for Lek has been particularly evident in the summer time, being partially supplied even by means of liquidity injection through the Bank of Albania intermediations in the foreign exchange market. The annual growth rate of deposits in Lek was 12.9 percent, being a satisfactory growth compared to the average historical rate. It was adequate to cover Government demand for the financing of deficit and the economy demand for credits in Lek. Meanwhile, deposits in foreign currency grew by 17.1 percent during 2004.