The Bank of England is developing a new settlement service with the capacity to support a potential future digital pound Sterling, according to reports.
The U.K. central bank has previously detailed its support for central bank digital currencies (CBDCs), and is currently in the process of redesigning its real-time gross settlement service.
The payment network is used by financial institutions across the country, and the update will include support for CBDCs, including a digital pound. The facility to support CBDCs is being developed as a “bolt-on” should the bank decide to roll out a digital currency in future.
The real-time gross settlement system is one of the linchpins of the U.K. financial system, settling over $900 billion in transactions every day. It also provides a direct channel for the central bank to inject liquidity into the economy, as well as supporting the Sterling denominated accounts of the UK’s financial institutions.
Expected to go live in 2022, the new system is designed to offer greater interoperability and more functionality for users, factoring in ongoing technological development in digital currencies and payments.
The news follows recent comments from the bank’s governor, Andrew Bailey, who said the Bank of England was “seriously considering” launching its own central bank digital currency.
Representatives of the bank have also previously said private companies could issue digital pounds in the future, in accordance with bank design principles and policy objectives.
The developments come at a time of increasing interest globally in CBDCs, with central banks across the world currently developing their own versions of a digital currency.
The news of work in progress at the Bank of England that would support a digital pound is the latest vote of confidence in the technology from the U.K. central bank.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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