Digital Pound 'Likely To Be Needed' Say U.K. Treasury and Bank of England
Crypto News

Digital Pound 'Likely To Be Needed' Say U.K. Treasury and Bank of England

2m
Created 1yr ago, last updated 1yr ago

The move to create a U.K. central bank digital currency got a big boost on Monday when the two bodies said digital pound testing must go forward.

Digital Pound 'Likely To Be Needed' Say U.K. Treasury and Bank of England

Table of Contents

Listen to the CoinMarketRecap podcast on Apple Podcasts, Spotify and Google Podcasts

A digital pound is "likely to be needed in the future" according to a joint report by the U.K.'s Treasury and the Bank of England.

While the report is not final approval of a plan to launch a central bank digital currency, or CBDC, it will definitely light a fire under both the design process and the public discussion about whether one should be developed.

CBDC designs are generally built on either blockchain or the digital ledger technology (DLT) that blockchains are built on. One of the prime arguments used to support CBDCs is to fend off the use of privately issued stablecoins.

The Treasury and BoE said they will unveil a roadmap towards launching a digital pound on Tuesday, with the approval decision not coming before 2025. A formal public consultation will be launched today.

Great Potential

The BoE began investigating a CBDC at the behest of Prime Minister Rishi Sunak in 2021, when he was Chancellor.

In October, Economic Secretary to the Treasury Andrew Griffith said that a long delay in issuing a digital pound could hurt the economy.

"A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability," said Andrew Bailey, Governor of the BoE, on Monday. He added:

"As the world around us and the way we pay for things becomes more digitalized, the case for a digital pound in the future continues to grow."

Both he and Chancellor Jeremy Hunt emphasized that security and financial stability would be key factors in the decision.

In January, Griffith made something of a preemptive announcement that a digital pound would be designed to be incapable of tracking consumers' spending — an issue that has been a serious concern in virtually every CBDC debate around the world.

A Wider Debate

The ruling will put the U.K. in step with the EU, where the European Central Bank has come out as a strong supporter of a digital euro.

It will also put more pressure on Washington, D.C., where both the Federal Reserve and the Treasury Department are decidedly more hesitant about the value of and need for a digital dollar. That said, the Federal Reserve is testing designs and studying the need for a CBDC.
Momentum has been with CBDCs this past year, with India and Turkey moving aggressively to create them, as is Russia. And Japan plans to begin piloting one this year. In all, well over 100 countries are at least considering CBDCs.

The two largest existing CBDCs are China's digital yuan, and Nigeria's e-naira. Both have been struggling with uptake, with China continuing to delay the digital yuan's formal launch and Nigeria's central bank governor accusing retail banks of stymying the initiative.

1 person liked this article