UK lacks expertise for central bank digital currency
The Bank of England (BoE) is unlikely to issue a central bank digital currency (CBDC) anytime soon due to a lack of technical expertise, according to Jon Cunliffe, the deputy governor. Speaking at a treasury select committee hearing, Cunliffe stated that there is a greater than 50% chance that the central bank will eventually issue a CBDC, but the institution is not yet ready to do so.
The UK has been exploring the possibility of a digital pound for several years, but the BoE has been cautious about moving forward with the initiative. The deputy governor explained that the next phase of development will involve partnering with the private sector to test a potential digital pound in a simulated environment. This will help the BoE gain the necessary expertise to build a working prototype and test it in a live environment.
While the BoE has been exploring the potential benefits and risks of a CBDC, the institution has also been monitoring developments in other countries. China, for example, has been working on its own digital currency, the digital yuan, which has already been tested in several pilot programs. The European Central Bank (ECB) has also been exploring the possibility of a digital euro, and has launched a public consultation on the matter.
The BoE is aware that the development of a CBDC would require significant investment in infrastructure and technology, as well as a thorough understanding of the potential risks and benefits. The institution has been consulting with stakeholders in the private sector and academia to ensure that it has access to the necessary expertise.
Cunliffe emphasized that the BoE is committed to exploring the potential of a digital pound, but that the institution is not yet ready to move forward with the development of a CBDC. The next phase of the initiative will be critical in terms of gaining the necessary expertise and testing the technology in a simulated environment. If successful, the BoE may eventually move forward with the development of a working prototype and, eventually, the implementation of a digital pound.