LONDON, Nov. 9 (Reuters) – The Bank of England and Britain’s Treasury said on Tuesday they would hold formal talks next year on whether to proceed with a possible central bank digital currency (CBDC), which could take years to launch, Reuters reported.
The CBDC will be a new form of digital currency issued by the Bank of England that can be used for everyday payments by households and businesses. In the future, CBDC will coexist with cash and bank deposits, not replace them.
Back in March 2020, The British Bank published a discussion paper on CBDC, outlining a possible CBDC design approach and soliciting feedback from the payments industry, academia and other interested parties.
In 2022, the UK Treasury and the Central Bank decided to launch a consultation to assess the use case of THE UK CBDC, including various factors including structural design, potential impact and future development. No decision has yet been made on whether CBDC should be issued. A series of regulatory and industry consultations this year and next will determine whether the project will enter the “development phase” this year.
The consultation document will set out the Treasury and bank of England’s assessment of the introduction of the CBDC before deciding whether to proceed.
UK Financial Services Minister John Glen said retail CBDC would be used by people and businesses to meet their daily payment needs and help the UK stay at the forefront of innovation and technology in the financial sector.
Central banks around the world are now working on digital versions of their currencies to avoid leaving digital payments to businesses.
Since bitcoin’s creation, governments around the world have long been wary of cryptocurrencies because of their ability to circumvent capital controls and their potential to be used for illicit purposes such as money laundering.
In short, the joint development of a stable currency and CBDC will have a direct impact on the development of society.
The COVID-19 pandemic has further promoted the decline of cash transactions and the expansion of electronic payment. Therefore, countries have stepped up their research and layout of CBDC. The first consideration is to meet consumers’ demand for cash in the digital era.
Overall, the main motives for central banks are to conduct CBDC-related research and development, maintain financial stability, support monetary policy implementation, improve domestic and cross-border payment efficiency and security, and promote inclusive financial development.
Part of this article is from Reuters