Bank of England is experiencing difficulties in creating digital currency
2023.02.28 13:49
Bank of England is experiencing difficulties in creating digital currency
By Tiffany Smith
Budrigannews.com – A deputy governor claims that the Bank of England (BoE) lacks sufficient expertise, so the UK is not yet ready to issue a central bank digital currency (CBDC).
BoE deputy governor Jon Cunliffe stated at the treasury select committee hearing on Feb. 28 that there is more than a 50% chance that the UK central bank would issue a CBDC, but the regulator does not yet have the technical skills to issue a digital currency.
Cunliffe stated that the BoE plans to test a potential digital pound with partners from the private sector and anticipates acquiring the necessary expertise for the CBDC development in the subsequent phase.
“However, in order to proceed to the subsequent stage, which would involve building a functional prototype, testing it in a simulated environment, testing it in a live environment, and finally putting it into use, you would need to build a prototype. The deputy governor stated, “This next phase is designed to enable us to do that.”
Cunliffe emphasized that the CBDC’s motivation would greatly influence the design and structure of any potential digital pound. He added that the primary goal of the BoE in this situation would likely be to provide digital cash, or the digital equivalent of BoE notes, for “general payment purposes.”
We did not want a system in which remunerated and unremunerated Bank of England currency circulated simultaneously. Additionally, we did not want a system in which we would produce a product that resembled a savings product.
The deputy governor also talked about some potential CBDC benefits and functions that the current financial system does not have.
Cunliffe stated that a CBDC is about “opening a new frontier for people to improve payments and the way in which money is used,” comparing a potential digital pound to Apple’s iPhone app store. He stated that micropayments were a significant potential application for a digital pound, stating:
You will be able to make very, very small payments much more easily with this. Therefore, you wouldn’t need to subscribe to a newspaper in order to read an article. That could be done for very little money.
The announcement comes at a time when the United Kingdom government is becoming more involved in the CBDC’s development. In January 2023, the Treasury will open a position to lead the development of a digital pound. While European finance ministers once again expressed support for a retail version of the digital euro, BoE governor Andrew Bailey reportedly expressed doubts about the short-term necessity of a CBDC.
