The Bank of England and the British Treasury have announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential new form of digital money issued by the Bank of England and for use by households and businesses.
While the announcement was made by Chancellor of the Exchequer Rishi Sunak as part of the UK Government’s response to the Kalifa Review, the new digital currency would be alongside cash and bank deposits, rather than replacing them.
Aims of the task force
In addition, the Taskforce aims to ensure a strategic approach is adopted between the UK authorities as they explore the digital currency, in line with their statutory objectives, and to promote close coordination between them. The Taskforce will:
- Guide evaluation of the design features a digital currency must display to achieve our goals.
- Coordinate exploration of the objectives, use cases, opportunities, and risks of a potential UK CBDC.
- Support a rigorous, coherent, and comprehensive assessment of the overall case for a UK CBDC.
- Monitor international CBDC developments to ensure the UK remains at the forefront of global innovation.
The Taskforce will be co-chaired by Deputy Governor for Financial Stability at the Bank of England, Jon Cunliffe, and the Treasury’s Director General of Financial Services, Katharine Braddick.
Commenting on the announcement, John Whelan, MD Digital Investment Bank & Innovation, Banco Santander expressed his excitement “to see this development from the Bank of England supporting the opportunity to use tokenized cash assets on next generation payment systems, enabling on-chain wholesale exchange of value.”
In parallel, the Bank of England announced the establishment of a CBDC Unit, which will lead its internal exploration around the currency, as well as leading the Bank’s external engagement on CBDC, including with other UK and international authorities.
Banks searching for digital currency
“We’re launching a new taskforce between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency (CBDC),” British finance minister Rishi Sunak told a financial industry conference.
Other central banks are also looking at whether to set up digital versions of their own currencies, essentially widening access to central bank funds which only commercial banks can use at present. This process would speed up domestic and foreign payments and reduce financial stability risks.
While China is a front-runner to launch a CBDC, the European Central Bank said it was studying an electronic form of cash to complement banknotes and coins, but any launch was still several years away.