UK central bank looking into the creation of a digital currency

The Bank of England with the Union Jack in from of it

The central bank of the United Kingdom - the Bank of England (BoE) - has announced that it is looking into the creation of a Central Bank Digital Currency (CBDC). To decide whether it wants to go down this route, the BoE has established the CBDC Taskforce to broach the subject.

The new taskforce will have to investigate several things including the objectives, use cases, opportunities, and risks of a CBDC. It will monitor the development of CBDC’s internationally to ensure the UK remains at the forefront of innovation. It will guide the design of the CBDC to ensure it’s meeting the BoE’s goals, and it will “support a rigorous, coherent and comprehensive assessment of the overall case for a UK CBDC.”

According to the BoE, it and the government have not yet committed themselves to the establishment of a CBDC in the UK but are set to engage with stakeholders of the benefits, risks, and practicalities of introducing a CBDC. If it is introduced, it would be geared towards household and business uses and would exist alongside cash and bank deposits rather than replace them.

Heading up the taskforce will be Deputy Governor for Financial Stability at the BoE Jon Cunliffe and HM Treasury’s Director General of Financial Services Katharine Braddick. In addition to the taskforce, a CBDC Engagement Forum has been established to engage senior stakeholders and get input on non-technical issues related to CBDC and a CBDC Technology Forum has been created to gather input on technology aspects of CBDC from a cross-section of expertise and perspectives.

The Bank of England did not give a timeline for this project but several other countries began looking into CBDC’s a while ago so it won’t want to pursue a CBDC too slowly if it wants to remain at the “forefront of innovation”.

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