The Bank of England and the UK Treasury are taking the first steps towards achieving a major breakthrough in the way the British public pay – the launch of a digital currency. On the 7th of February, the two organizations launched a joint consultation paper, seeking input on the development of a Central Bank Digital Currency (CBDC).
According to the Finance Minister, Jeremy Hunt, this new currency will revolutionize the way payments are made in the UK, creating an alternative to other forms of digital payments such as stablecoins, issued by private companies.
The Bank of England and the UK Treasury are both committed to developing a digital currency that allows for cash to remain in circulation. They are also looking to create a secure, modern, and efficient payment system that can be used by everyone.
What does the BoE Governor Have To Say About This?
BoE Governor Andrew Bailey highlighted the potential for a digital pound to create a new payment system, benefit businesses, reinforce trust in the currency, and further strengthen financial stability. However, he noted the various ramifications that must be examined in the coming technical work. This consultation, along with the bank’s meticulous research to be conducted, will be the building blocks for what could be a major step forward for the nation’s use of money.
The digital pound and related blockchain technology will not come to fruition until 2025 at the earliest if the BoE and Treasury give the green light. Prime Minister Rishi Sunak, back in April 2021, instructed the BoE and Treasury to create the Central Bank Digital Currency Taskforce to supervise their evaluation and potential deployment of the digital pound.
Jon Cunliffe, BoE Deputy Governor is set to give a speech on 7th February to update the finance industry on the latest progress of the CBDC work conducted by the central bank and Treasury. This comes after the Treasury’s job posting on LinkedIn on 24th January, to look for a team lead to head the Payments and Fintech Team of around 20 people, preparing for the potential of a ‘digital pound’.