“We are launching a new working group between the Treasury and the Bank of England to coordinate exploratory work on a possible central bank digital currency.” With these words Rishi Sunak, Minister of Finance of the United Kingdom, has confirmed that the country is investigating the possibility of creating its own digital currency.
At the moment it is a first step, as the Bank of England and the government, for now, have not made a decision on whether to implement it or not. In fact, they ensure that stakeholders will be counted on to weigh the risks, benefits, and practicalities in doing so. Nor is it contemplated that it is designed to replace physical cash, but that this future digital pound would coexist with it.
UK does not want to be left behind
In a statement published by the Bank of England, the entity states that the CBDC (Central Bank Digital Currency) it would be a new form of digital currency issued by the Bank of England and for home and business use. The aim of the task force is to ensure that “a strategic approach is taken among UK authorities as they explore CBDC, in line with their statutory objectives, and to promote close coordination between them.”
In this way, the working group will coordinate the exploration of the objectives, use cases, opportunities and risks of a possible UK CBDC; will evaluate the characteristics that said currency must have to achieve the objectives and, of course, oversee international CBDC developments to “ensure that the UK remains at the forefront of global innovation”.
This working group will be co-chaired by Bank of England Deputy Governor for Financial Stability Jon Cunliffe and Treasury Chief Financial Officer Katharine Braddick. As appropriate, other UK authorities may also participate in the working group.
The Bank of England has also announced a “CBDC Engagement Forum“whose purpose is to engage high-level stakeholders and gather strategic input on the non-technological aspects of digital currency, as well as a”CBDC Technology Forum“for input on” all aspects of CBDC technology from a cross-section of knowledge and perspectives. ”
The members of the first forum will come from financial institutions, civil society groups, merchants, business users and consumers, while the second forum will be composed of guests from the Central Bank from financial institutions, academic institutions, financial technology companies, providers of infrastructures and technology companies
Regarding the possible value of this digital currency, the Bank of England has ensured that, in the event that a CBDC is introduced, this would be denominated in pounds sterling, so 10 pounds of CBDC would always be worth the same as a 10 pound note. In any case, the UK idea is still in the analysis phase, so we will have to wait.
The United Kingdom is not the only country interested in this type of currency. China is already exploring its potential for a long time (and has even gifted digital yuan to some citizens to try). The European Union, for its part, is also investigating a possible digital euro of which more details are expected this summer. According to Christine Lagarde, President of the European Central Bank, its development will take time, but “no more than five years”.
Via | Reuters
More information | Bank of england