News Sentiment: Positive
The Bank of England (BoE) and His Majesty’s Treasury anticipate that the United Kingdom will need to adopt a Digital Pound or central bank digital currency (CBDC) by 2030.
Bank of England plans to undertake a four-month consultation
The Bank of England and the Treasury plan to undertake a four-month consultation in which companies, academics, and the general public will be encouraged to give their thoughts on introducing a “digital pound.”
According to reports, cash and coin payments in the United Kingdom plummeted by 35% in 2020. Cash now accounts for about 15% of all transactions in 2021, compared to nearly 50% of transactions in 2011.
According to The Telegraph, citing the yet-to-be-released consultation paper, BoE governor Andrew Bailey and chancellor of the Exchequer Jeremy Hunt believe the UK would “likely” require a CBDC.
The news comes nearly two years after Prime Minister Rishi Sunak appointed a working team as chancellor to assess whether the UK should establish a CBDC.
While Bailey and Hunt feel it is “too early” to commit to establishing the infrastructure for a CBDC, they are “convinced” that more effort is “warranted.”
BoE will begin the “design” phase of the Digital Pound project
The BoE and Treasury will begin the “design” phase of the Digital Pound project, creating a blueprint for how the digital pound may be constructed and utilized.
According to the paper, the CBDC will take years to develop, and officials anticipate that 2025 is the “earliest” the BoE may begin growing and testing a prototype. However, the ultimate decision on whether or not a digital pound will be issued will not be made until then. A CBDC will also need considerable public investment, according to the research.
According to the study, if the digital pound receives final clearance, it might be introduced by 2030. The BoE has stated that the UK might expect to start its CBDC in the “second half of the decade.”
The digital pound is one of several CBDCs planned to be implemented worldwide in the coming years. The European Central Bank has been contemplating the potential of a digital euro, with many nations, notably Sweden and Denmark, investigating the notion of digital currencies.
