Despite the widespread consultations on the subject, the project is not yet ready.
Soon after revealing plans to explore the use of a central bank digital currency (CBDC) and issue a digital pound, the Bank of England (BoE) and the UK Treasury officials say that having UK central bank digital currency could provide lucrative opportunities for businesses in the region. According to Ben Broadbent, deputy governor for monetary policy at the Bank of England, the advantages of a digital pound are numerous. In particular, the digital pound would provide a faster alternative to online payment and lower settlement costs to businesses. Besides, it would help protect the financial stability of the pound.
Ben Broadbent said:
“The experience of digitalization so far is that new products and services enabled by new technologies can be adopted very rapidly at scale. This obviously brings opportunities for financial institutions, for businesses, for individuals. We would expect to see continued improvements, reductions in friction and cost of payment.”
The digital version of the pound has already got the nickname “Britcoin.” It is expected to launch by the end of this year. However, the specific date has not been announced yet as there is still a lot to explore. According to Bank of England governor Andrew Bailey, BoE will evaluate several different implications for the technical work around the launch of the digital pound. All the work that the central bank does on e-GBP will serve as the foundation for the country’s path of moving towards the adoption of CBDC.
UK’s Plans for CBDC
Currently, 114 countries that represent over 95% of global GDP are exploring a CBDC. As many as 11 countries have already fully launched a digital currency, and about 60 countries are in an advanced phase of CBDC exploration.
The UK’s digital pound has been in development since June 2021. The Bank of England believes that a digital pound would maintain public access to retail central bank money and encourage greater innovation, choice, and efficiency in domestic payments. The new digital fiat currency would be equivalent to the value of cash. In addition to the digital pound, the Bank of England is planning to launch a digital wallet to make it easier for users to spend their assets, similar to a contactless payment app.
The latest update on the digital pound has been the consultation paper released by the Bank of England and the UK Treasury on February 7. Despite the widespread consultations on the subject, the project is not yet ready. Some hope that the digital pound will be finalized by the end of this year, but officials believe 2025 is the earliest the BoE can start building and testing a prototype. Work will now move onto the design phase over the next 2-3 years. It will include a deeper look at the technology and policy requirements for a digital pound.
Darya is a crypto enthusiast who strongly believes in the future of blockchain. Being a hospitality professional, she is interested in finding the ways blockchain can change different industries and bring our life to a different level.
