The Bank of England (the Bank) and Her Majesty’s Treasury (HMT) have agreed to hold a formal consultation in 2022, a series of discussions that would decide whether the nation would move forward with a possible central bank digital currency (CBDC).
According to an official statement by the Bank, the matter is still under research and discussion and could take up until 2030 to implement, if approved.
"This consultation will begin an open discussion on the role a UK central bank digital currency might play in the UK. I’d encourage everyone to contribute to the discussion so we can explore the opportunities this could bring, as well as understanding any risks it may pose.” said John Glen, Economic Secretary to the Treasury.
According to Glen, a retail CBDC would benefit people and businesses based in the UK by providing a fast and reliable way of making everyday payments. This way, the country will stay at the forefront of innovation and technology in the financial sector.
To date, no decision has been made on the matter, despite the Bank’s earlier explorations for its development. Last month, Ripple joined the Digital Pound Foundation to contribute its expertise on blockchain implementation for CBDCs.
“No decision has been made on whether to introduce a CBDC in the UK, which would be a major national infrastructure project.” the Bank said.
With the forthcoming consultation, an assessment will be prepared by the ministry and the Bank, in which a case for the resolute necessity of a CBDC will undergo review.
“The plan to publish a consultation next year on CBDC is a crucial step in our policy development, especially as we further our thinking on the pressing issues at hand. What it will do is provide a platform for interested parties and relevant groups to engage with the key questions on the merits of CBDC, and whether the public sector should advance to a development phase.” shared Jon Cunliffe, Deputy Governor for Financial Stability.
Worldwide, central banks have been looking into digital currencies to curb the decline of fiat currency use, especially given the current outlook due to the COVID-19 pandemic. Contactless payments and other similar services have come to the forefront, and so have digital currencies and cryptocurrencies.
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