The Bank of England (BoE) is exploring a central bank digital currency (CBDC), joining other global economic giants in the move towards adopting a state-backed digital currency. BoE announced recently that it had established a CBDC taskforce that will coordinate the exploration of a CBDC.
The bank partnered with Her Majesty’s Treasury on the initiative. It stated, “A CBDC would be a new form of digital money issued by the Bank of England and for use by households and businesses. It would exist alongside cash and bank deposits, rather than replacing them.”
The taskforce will coordinate exploration of the objectives, use cases, opportunities and risks of a potential CBDC. It will also guide the evaluation of its design features, support a comprehensive assessment of the overall case for the CBDC and monitor international developments in the CBDC sector.
Jon Cunliffe, the deputy governor at the BoE and Katharine Braddick, the director general of financial services at the HM Treasury will co-chair the taskforce.
Internally, the bank will also establish a CBDC unit to lead the internal exploration of a digital pound.
Rishi Sunak, the Chancellor of the Exchequer, commented, “Our vision is for a more open, greener, and more technologically advanced financial services sector. The U.K. is already known for being at the forefront of innovation, but we need to go further.”
The move has already received the support of a number of leaders, both in the U.K. and within the larger digital currency industry. Lord Aamer Sarfraz, a member of the House of Lords, commented:
“Fintech has already brought benefits for people in everyday life, and the U.K. has become a particularly strong hub for its development. Looking ahead, a Digital Pound could bring benefits for both consumers and businesses and the U.K. must move faster in exploring the mechanics and regulatory system of such an innovation.”
BoE will be looking at the People’s Bank of China which has been one of the most advanced in this sector for guidance. The PBoC has continued to airdrop digital yuan to its citizens in the past year as it seeks to test its resilience and feasibility. The latest such airdrop was in Suzhou in which the bank airdropped $5 million worth of the CBDC. China is seeking to have the digital yuan fully functional in time for next year’s Beijing Winter Olympics.
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