UK to consult on potential central bank digital currency

Central banks around the world are studying digital versions of their currencies to avoid leaving digital payments to the private sector as the COVID-19 pandemic has accelerated the decline of cash in some cases.

“No decision has been taken on launching a CBDC in the UK, which will be a major national infrastructure project,” BoE said in a statement.

“The earliest launch date for a UK CBDC will be in the latter half of the decade,” it added.

The consultation paper will set out an assessment from the Ministry of Affairs of the CBDC and the BOE before taking a decision on how to proceed.

“A technical specification explaining the proposed conceptual architecture for any CBDC will follow the consultation. This may include optimal design for a UK CBDC and in-depth testing of feasibility,” the document states.

Financial Services Minister John Glenn said retail CBDCs will be used by people and businesses for their everyday payment needs and help the UK stay at the fore of innovation and technology in the financial sector.

In July the European Central Bank took the first step towards launching a digital version of the euro, beginning a 24-month investigation phase after three years of implementation.

Work on the digital euro has accelerated after Facebook announced plans to create its own currency in 2019, which poses a potential threat to the core business of central banks.

While China has been at the forefront of CBDC moves, the US Federal Reserve has been more skeptical.

Some central banks have warned that widespread use of CBDCs could hollow out commercial banks, depriving them of cheap and stable sources of funds such as retail deposits.

This story has been published without modification in text from a wire agency feed.