The United Kingdom could have a digital pound by the end of the decade, the country’s central bank and treasury have announced.
The Bank of England (BoE) and HM Treasury launched the digital pound project this week, joining several central banks globally working on their central bank digital currencies (CBDCs).
Described as a new form of money—which would sit alongside and not replace cash—the digital pound is expected to be used by households and businesses for their daily payment needs. It would be a digital counterpart to the familiar trusted bank notes, the BoE stated in its consultation paper while promising “rigorous standards of privacy and data protection.”
The need for a digital pound is becoming increasingly pressing as payments in the U.K. turn digital. BoE believes that it would offer the country an opportunity to boost its financial and monetary stability while safeguarding its monetary sovereignty.
While Treasury and BoE say that the U.K. could have a digital pound by the end of the decade, they still won’t commit to the project.
“It is too early to commit to build the infrastructure for one, but we are convinced that further preparatory work is justified,” Jeremy Hunt, the Chancellor of the Exchequer, and BoE Governor Andrew Bailey said in their joint statement.
In his speech following the announcement, Deputy Governor Jon Cunliffe revealed that the BoE will likely have measures to prevent hoarding the digital currency.
“We propose a limit of between 10,000 pounds and 20,000 pounds per individual as the appropriate balance between managing risks and supporting wide usability of the digital pound,” he stated.
Any funds on a digital pound account above this threshold would be “swept” into a user’s bank account.
BoE’s only request? Don’t call it Britcoin. The central bank believes this would lead to the CBDC being lumped together with other digital currencies, most of which Cunliffe says are “highly speculative and have no intrinsic value.”
“The digital pound can be confused in peoples’ minds with crypto assets such as bitcoin. I should take this opportunity to correct this misapprehension. Indeed, nothing could be further from the truth,” he stated.
The developments come just weeks after the BoE’s new job posting seeking a new Head of CBDC.
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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