The Bank of England (BoE) and the UK Treasury are preparing plans to create a digital currency that could “provide a new form of payment” without necessarily replacing cash.
On February 7, a joint consultation paper on central bank digital currencies (CBDCs) will be released, with the BoE and Treasury seeking feedback on how and whether to proceed with building a CBDC.
In a public statement on February 6, Finance Minister Jeremy Hunt indicated that the two entities would seek to develop a modernized digital payments system that does not necessarily preclude the use of cash.
“While cash is here to stay, a digital pound issued and backed by the Bank of England could be a reliable, accessible and easy-to-use new form of payment,” he said, adding that “we want to investigate what is possible first.” , always making sure to protect financial stability.”
Another key area of focus will be providing a government-backed alternative to privately issued stablecoins, and BoE and treasury officials expect big tech companies to develop them in the coming years.
As part of the statement, BOE Governor Andrew Bailey stressed that a “digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.”
“However, there are a number of implications that our technical work will need to consider carefully. This consultation and the additional work to be done by the bank will now form the basis of what would be a profound decision for the country on how we use the money.”
BoE Lieutenant Governor Jon Cunliffe will also give a speech on February 7 to update the financial industry on the CBDC’s work of banks and treasuries so far.
If they decide to go ahead, it was suggested that Digital Pound and its underlying blockchain-based system would not be built until at least 2025.
Related: London Emerges As World’s Most Crypto-Ready City For Business: Research
In April 2021, the current prime minister and former finance minister Rishi Sunak directed the BoE and the Treasury to collaborate and form the Central Bank Digital Currency Task Force. Essentially, the duo is tasked with overseeing the study and potential implementation of the digital pound.
While it seems to have been a slow process so far, given how cautious the bank’s and treasuries’ stances are, the latter posted a job listing on LinkedIn on Jan. 24 requesting a team lead for its Payments and Fintech team from about 20 people. it focused on exploring a “potential digital pound”.
This post UK digital pound would modernize payments but not replace cash: Minister
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