1 March: UK ‘Digital Pound’ Years Away, Says Deputy Governor
A ‘digital pound’ could still be five years away, if it even materialises at all, a senior Bank of England official told MPs yesterday.
The Treasury has been consulting on the case for a central bank digital currency (CBDC) for some months, working closely with the Bank.
Yesterday, the cross-party Treasury Select Committee of MPs met with the Bank of England’s Deputy Governor for Financial Stability, Sir Jon Cunliffe, to hear latest developments.
A CBDC is currency issued and administered by a country’s central bank, such as the Bank of England. But instead of being physical money (notes and coins) it is in digital (or electronic) form.
All transactions using this digital currency are also recorded in digital form – such as on an encrypted database.
Asked whether the Bank has the technical skills to create a CBDC, Sir Jon said no, but that he hoped it would by the time a case for a digital pound was proven. He said it would also involve working with the private sector to build and test a prototype.
CBDCs have been criticised as a solution in search of a problem, and the committee quizzed the Deputy Governor on the justification for creating one. Sir Jon explained that a CBDC could solve problems that don’t yet exist, but are expected based on the trajectory of the ongoing crypto revolution.
He pointed out that the Apple iPhone launched with 15 apps that performed functions people could already do with other devices, but spawned an entire market of additional apps.
Giving an example of how a CBDC might be used, Sir Jon said consumers could make ‘microtransactions’ – fractional payments for items such as individual news articles instead of paying for all-encompassing subscriptions
Original source: https://www.forbes.com/uk/advisor/investing/2023/03/01/cryptocurrency-updates/
