UK is on track with CBDC development: BoE Deputy Governor

    Simar Marwaha
    Simar Marwaha
    Published on March 01, 2023 05:43 PM

    No compensation plans are in place, and cryptocurrency trading is mostly uncontrolled in the UK. But are they making any progress? Do they use CBDCs? Let's find out what's new.

    UK is on track with CBDC development: BoE Deputy Governor
    Source: Unsplash

    Bank of England's (BoE) Deputy Governor Jon Cunliffe believes that the U.K. is not prepared to issue a digital pound since the central bank has not yet acquired the necessary skills due to the high degree of technological development required.

    Cunliffe made the remarks during his testimony before the Treasury Select Committee. He said that while the BoE will likely issue a digital pound, England's CBDC, the regulator lacks the technological know-how.

    The central bank anticipates having the necessary knowledge by the time it proceeds with the next stage of development, which involves testing a digital pound with business sector partners, the deputy governor continued.

    It's crucial to remember that blockchain is still a relatively new technology for facilitating financial transactions. It requires fine-tuning and technical expertise to ensure that it operates as desired. More than 100 jurisdictions worldwide are working towards creating a central bank digital currency (CBDC).

    Also read: Indian CBDC Launch Update

    Digital Pound (England's CBDC) Update

    If it materializes, a "digital pound" might still be five years away, a top Bank of England official warned Lawmakers recently.

    Working closely with the Bank, the Treasury has been advising on the case for a central bank digital currency (CBDC) for some time.

    Sir Jon Cunliffe, the Deputy Governor for Financial Stability at the Bank of England, met with the cross-party Treasury Select Committee of MPs yesterday to discuss recent events.

    A CBDC is a money issued and managed by a nation's central bank, such as the Bank of England. Yet it exists in digital (or electronic) form rather than the physical form of money (notes and coins).

    When asked if Bank has the technological know-how to establish CBDC, Sir Jon said it did not, but he hoped it would by the time the case for the digital pound was established. He added that creating and testing a prototype would require collaboration with the business sector.

    CBDCs have drawn criticism for being a problem needing a solution, and a committee questioned the Deputy Governor on the rationale behind their establishment. According to Sir Jon, CBDC might address issues that don't now exist but are anticipated given the upcoming crypto revolution.

    Deputy Governor's take on CBDCs

    Jon Cunliffe, the Bank of England's (BoE) deputy governor of Britain, informed MPs that the BoE is scheduled to introduce its digital currency. Cunliffe highlighted that, contrary to what some members of parliament believed, the apex bank is not falling behind other countries central banks.

    When responding to inquiries from the Treasury Select Committee, Cunliffe outlined the BoE's view. MPs questioned Cunliffe about the delay in the public consultation on a digital pound since they thought it would have started last autumn rather than in February.

    Due to this month's launch, Cunliffe asserts that the BoE is not behind its international competitors in establishing a national digital currency. He noted that the BoE and other significant central banks are in comparable stages. He claims that most banks in the BoE category are now researching digital currency. The research intends to prevent relying solely on the private sector for digital payments.

    The BoE and the finance ministry informed the public of ongoing plans to develop a digital pound in February 2023. The digital pound would reportedly be kept in a wallet provided by banks, and the bank set a time goal for the debut after 2025.

    Cunliffe confirmed that the dialogue was scheduled to begin last fall. It, however, was impossible because of what he called interruptions. As some parliamentarians had speculated, he denied conflict between the BoE and the finance ministry.

    Cunliffe attributed some of the commotions to the UK government bond prices collapsing due to a mismanaged budget. He mentioned that the BoE had to interfere in the markets as of last September. Thus, it cannot move on with the consultation process for the digital pound.

    The creation of the digital pound will probably continue, Cunliffe promised the legislators. He stated that the idea might be extremely beneficial for the economy and society but added that there were still issues with the competition that would need to be handled before the digital pound could be introduced.

    Related: CBDC Update: Some nations are out of the digital currency league