- The Central Bank of England is in the process of developing a digital pound which will not be targeted at the retail user but will be applied as an account managed instrument at the commercial level.
- One of the reasons why it will not be focused on retailers is that the retail market uses this channel to launder money.
Cryptocurrencies changed traditional economies and are here to stay, and little by little the old school is incorporating the new, as is the case with the Bank of England. The British bank is planning to carry out the project of the pound digital, although it poses some differences with respect to others Central Bank Digital Currency (CBDC).
The one who spoke about it was the deputy governor of the BoE, Joh Cunliffe, who gave some details about how it would be implemented. It would not function as a direct to retail user currency, as is the case with fiat, but rather would be applied as “an instrument managed by accounts at the commercial level”.
The one in charge of overseeing the CBDC project in Great Britain wants the digital pound to be functional and “better for consumers in online transactions”, adding:
“I think it is highly unlikely that any of us will issue a retail CBDC as a bearer instrument. It would probably be some kind of account-based instrument.”
Development of the digital pound
The Bank of England will be in charge of creating the macro infrastructure, although the frontend would be carried out by a private sector payment provider.
“We will produce the asset and the rails. But the interface with the public would be done by private sector payment providers,” Cunliffe acknowledged as published. CryptoSlate.
The revolutionary project like this takes time and the British authorities are very clear about it. The launch of the digital pound is not less than five years away, they explained.
The fear of the United Kingdom, like many other nations in the world, is that digital assets are used for illegal activities. The biggest fear is that the retail market uses this route to launder money. As if fiat cash is not used, among other ways, for black market trading.
Why would a state launch a CBDC when so many other alternatives are already available? Francisco Uría, Global Director of Banking and Capital Markets at KPMG, company that offers audit services, legal, tax and financial advice, no doubt: traditional finance is threatened by this novelty.
Uría considered, in December of last year, “the inability to manage financial stability and the loss of sovereignty” like what digital assets could take away from governments.
Countries and the CBDC race
At the moment, according to the tracking carried out by Atlantic Council10 countries already have a CBDC program while 15 have pilot tests in place. They have already been launched in the Bahamas, Jamaica, Antigua and Barbuda, Saint Kitts and Nevis, Montserrat, Dominica, Saint Lucia, Saint Vincent and the Grenadines, and Grenada. All of them are in Central America.
Pilot tests are taking place in: Anguilla, South Africa, Saudi Arabia, United Arab Emirates, Singapore, Malaysia, Thailand, Hong Kong, China, South Korea, Russia, Kazakhstan, Ukraine, Sweden and France.
The digital pound is close to being a fact, albeit with its forms. Probably more and more countries are approaching this determination.
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