Bank of England to develop its own digital currency

The Bank of England and Britain’s Treasury are contemplating the potential creation of a Central Bank Digital Currency (CBDC), joining the likes of China and Sweden in exploring the next big step towards the future of money.

On Monday, the central bank and the government revealed to the public the creation of a task force that will coordinate efforts on the possible creation of a Bank of England-issued digital currency that can be used by households and businesses.

The task force will engage in a series of discussions together with stakeholders to tackle the risks and benefits before making their decision.

Co-existence is the end goal

Before any more speculations are made, the government and the Bank of England were quick to offer clarifications.

In a statement, they said that if approved, the digital currency will exist alongside cash and bank deposits, rather than replacing them. This means that even when there is already a BOE-issued cryptocurrency, cash and bank deposits and other transactions involving fiat currency will still continue.

The move only proves that central banks are taking actions to make sure that they won’t fall behind especially with modern technology and coronavirus accelerating the push towards cashless transactions and cryptocurrencies such as Bitcoin (BTC) gaining broader adoption.

Continuing digital ambitions

Central banks are at different stages of developing various digital currencies.

In 2020, Bahamas launched the Sand Dollar, becoming one of the world’s first digital currencies that are backed by a sovereign state. China is also in the thick of things developing its Digital Yuan, although the U.S. Federal Reserve said that it is not something that the U.S. would rush into, or even worry about.

The European Central Bank and Sweden’s Riksbank have said that probably in the middle of the decade, they will be able to follow what other banks have started.

 

Image courtesy of CNBC/YouTube 

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