The Bank of England (BoE) and the Treasury of the United Kingdom are moving on with plans to establish a digital currency that might “offer a new method to pay” without necessarily replacing cash. These ideas are in the early stages.
A joint consultation paper on central bank digital currencies (CBDCs) is scheduled to be released on February 7, with the Bank of England and the Treasury seeking views on how and if they should continue with establishing a CBDC. The topic of the document is central bank digital currencies (CBDCs).
Jeremy Hunt, the Minister of Finance, made an announcement to the public on February 6 indicating that the two organizations will collaborate in an effort to build a modernized digital payments system that does not necessarily exclude the usage of cash.
“While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that is trusted, accessible, and easy to use,” he said. He continued by saying that “we want to investigate what is possible first, while always making sure that we protect financial stability.”
Officials from the Bank of England and the Treasury Department anticipate that large technology firms will provide a government-backed alternative to privately produced stablecoins over the next few years. This will be another significant area of attention that will be addressed.
As part of the statement, Governor of the Bank of England Andrew Bailey highlighted the fact that a “digital pound would enable a new method to pay, benefit companies, retain faith in money, and better safeguard financial stability.”
“However, there are a number of ramifications that will need to be thoroughly considered by our technical work. This consultation, together with the further work that will be done by the bank at this time, will provide the groundwork for what would be a major choice for the nation about the manner in which we use money.
A speech by BoE Deputy Governor Jon Cunliffe is also scheduled to take place on February 7. The purpose of this address is to provide the financial sector with an update on the central bank and Treasury’s CBDC work to far.
It was proposed that even if they choose to continue ahead with the project, the construction of the blockchain-based infrastructure that would support the digital pound would not take place until at least the year 2025.
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Rishi Sunak, the current prime minister and a former finance minister, issued an order in April 2021 mandating that the Bank of England and the Treasury work together to establish the Central Bank Digital Currency Taskforce. The two individuals are essentially entrusted with supervising the investigation as well as the possible deployment of the digital pound.
Although it seems to have been a slow burn so far, given how cautious the BoE and Treasury’s stances are, the latter did post a job listing to LinkedIn on January 24 calling for a team lead for its Payments and Fintech Team of approximately 20 people focused exploring on a “potential digital pound.” Despite the fact that it appears to have been a slow burn so far, given how cautious the BoE and Treasury’s stances are, the Treasury did post the job listing.