For some time, the British government has been very involved in the development of a CBDC. In this regard, the Treasury opened a position in January 2023 to lead the process of developing an e-book. According to analysts, the chances of the Bank of England issuing a CBDC are estimated at more than 50%. But, for the deputy governor of the BoE, now is not the time to develop a central bank digital currency. Find out why Jon Cunliffe thinks the UK is not ready to issue a CBDC.
The BoE does not have enough technical skills to create a CBDC
The Deputy Governor of the BoE recently said that the UK cannot yet launch a CBDC. Jon Cunliffe explained that it takes specific technical skills to develop a central bank digital currency. But, according to him, the Bank of England does not yet have all the necessary expertise. The Deputy Governor made the statement during the February 28 Treasury Select Committee hearing.
Cunliffe mentioned that the BoE is considering testing a possible digital book with private sector partners. He then specified that the Central Bank might get the skills they lack during the testing phase. The institution will thus be able to advance its CBDC development project.
The Deputy Governor of the BoE said : “The next step would be to build a working prototype, test it in a simulated environment, then test it in a real environment, and then implement it. This next phase is designed to put us in a position to do just that.“.
Cunliffe clarified that the digital book mission will determine how it would be designed and structured. “We did not want a system in which there were two forms of Bank of England money in circulation, paid and unpaid. Also, we didn’t want a system where we would produce something that had the characteristics of a savings product“, he added.
Jon Cunliffe believes that a CBDC can offer different advantages over the traditional financial system. Indeed, he said that a digital book could “open a new frontier for people to improve payments“. He added : “It will be much, much easier for you to make very, very small payments“.
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