The Bank of England (BoE) and the British Treasury are preparing plans to create a digital currency that could “provide new ways of paying” without having to replace cash.
On February 7, a joint consultation paper on Central Bank Digital Currencies (CBDCs) is set to be tabled, with the BoE and Treasury seeking feedback on how, and if, they should proceed with building CBDCs.
In a public statement on February 6, Finance Minister Jeremy Hunt indicated that the two entities will work to develop a modern digital payment system that does not necessarily negate the use of cash.
“While cash is here to stay, the digital pound issued and supported by the Bank of England can be a new way to pay that is reliable, accessible and easy to use,” he said, adding “we want to investigate what can be done first. , while always making sure we protect financial stability.”
Another key focus is on providing a government-backed alternative to privately issued stablecoins, with officials from the BoE and treasury expecting big tech companies to grow in the coming years.
As part of the statement, BOE Governor Andrew Bailey emphasized that “the digital pound will provide new ways to pay, help businesses, maintain confidence in money and better protect financial stability.”
“However, there are some implications that should be carefully considered by the technical work. This consultation and the further work that the bank will do now will be the basis for important decisions for the country on how to use the money.
BoE Deputy Governor Jon Cunliffe will also give a speech on February 7 to update the financial industry on the work of CBDC banks and treasuries so far.
If they decide to go ahead, it is suggested that the Digital Pound and the underlying blockchain-based system will not be built until at least 2025.
related: London emerges as the most crypto-ready city for business – research
In April 2021, current Prime Minister and former finance minister Rishi Sunak directed the BoE and the Treasury to collaborate and form a Central Bank Digital Currency Task Force. Essentially the duo is tasked with overseeing the study and potential implementation of the Digital Pound.
Although it seems to be slow until now, due to the caution of banks and treasuries, the latter posted a list of jobs to LinkedIn on January 24 asking for a team leader for the Payments and Fintech Team of about 20 people. focused on exploring the “potential of the digital pound.”