The Bank of England (BoE) and the UK Treasury are preparing plans to create a digital currency that could “offer a new way to pay” without necessarily replacing cash..
A Joint Consultation Paper on Central Bank Digital Currencies (CBDCs) will be published on February 7in which the Bank of England and the Treasury seek views on how – and if – they should proceed to create a CBDC.
In a public statement on February 6, Finance Minister Jeremy Hunt indicated that the two entities would seek to develop a modernized digital payments system that does not necessarily negate the use of cash..
“Although cash is here to stay, a digital pound issued and backed by the Bank of England could be a reliable, accessible and easy-to-use new way to pay,” he said.adding that “we want to investigate what is possible first, always making sure to protect financial stability.”
Another key area of focus will be providing a government-backed alternative to privately issued stablecoins.and BOE and Treasury officials expect big tech companies to develop them in the coming years.
As part of the statement, BOE Governor Andrew Bailey stressed that a “digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability”.
“However, there are a number of implications that our technical work will need to consider carefully. This consultation and the subsequent work that the bank will now carry out will form the basis of what would be a profound decision for the country on how we use the money.”
Bank of England Deputy Governor Jon Cunliffe is also scheduled to deliver a speech on February 7 to update the financial sector on the work done so far by the central bank and the Treasury on CBDC.
If they decide to go ahead, it was suggested that the digital pound and its underlying blockchain-based system would not be built until at least 2025.
In April 2021, current Prime Minister and former Finance Minister Rishi Sunak directed the BoE and the Treasury to collaborate and form the Central Bank Digital Currency Task Force.. Essentially, the duo is in charge of supervising the study and the possible implementation of the digital pound.
Although it seems to have been a slow process so far, given the caution of the Bank of England and the Treasury, the latter posted a job posting on LinkedIn on January 24 requesting a team leader for its payments and fintech team.made up of about 20 people and focused on exploring a “potential digital book”.
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