The Bank of England (BoE) and Her Majesty's Treasury (HMT) have announced the next steps on the exploration of a UK Central Bank Digital Currency (CBDC). In 2022, BoE and HMT will launch a consultation setting out their assessment of the case for a UK CBDC, including the merits of further work to develop an operational and technology model for a UK CBDC. The consultation will evaluate the main issues at hand; consider the high-level design features, possible benefits, and implications for users and businesses; and considerations for further work. The consultation will form part of a "research and exploration" phase to inform policy development over the next few years.
The 2022 consultation will inform a decision on whether the authorities are content to move into a development phase, which will span several years. A technical specification would follow the consultation explaining the proposed conceptual architecture for any CBDC. This could involve in-depth testing of the optimal design for, and feasibility of, a UK CBDC. If the results of this development phase conclude that the case for CBDC is made, and that it is operationally and technologically robust, then the earliest date for launch of a UK CBDC would be in the second half of the decade. CBDC would be a new form of digital money issued by BoE and for use by households and businesses for their everyday payments needs; it would exist alongside cash and bank deposits and will not replace them.
At this time, the authorities also reiterate that no decision has been made on whether to introduce a CBDC in the UK, which would be a major national infrastructure project. BoE and HMT had initiated the joint CBDC Taskforce in April 2021, to coordinate the exploration of a potential UK CBDC. BoE has also set up the Engagement and Technology forums, where relevant stakeholders from industry, civil society, and academia provide strategic and technical input to the work on CBDC.
Related Link: Statement
Keywords: Europe, UK, Banking, CBDC, Digital Currencies, Suptech, Regtech, HMT, BoE
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