The Bank of England (BoE) and the Ministry of Finance believe that the United Kingdom should probably create a central bank digital currency (CBDC) by 2030. It was also announced that it will introduce a roadmap for the digital pound next week, according to a government source.
Vice Governor Jon Cunliffe will give an update on the BoE’s work on the CBDC on February 7, however Governor Andrew Bailey and Treasury Secretary Jeremy Hunt said all of the following to The Telegraph:
“Based on our work so far, the Bank of England and HM Treasury judge that it is likely that a digital pound will be needed in the future.”
The BoE declined to comment on the article, but said that a joint consultation on the digital pound will soon appear.
The UK reportedly experienced a 35% drop in cash and coin payments in 2020. Cash payments accounted for about one in six payments; debit and credit card account for the other five. So it has become even more important that they develop a CBDC.
A central bank digital currency is a digital version of fiat currency, pegged to fiat reserves in a 1:1 ratio, allowing citizens and businesses to manage funds much more efficiently and affordably.
The digital pound is one of many CBDCs expected to be introduced around the world in the coming years. The European Central Bank (ECB) has discussed the future of a digital euro, and several countries, including Sweden and Denmark, have also begun exploring the concept of digital currency.
CBDC pioneer, China’s digital yuan, launched in beta for local app stores for iOS and Android last year. Recent developments include upgrades to smart contract functionality in addition to a range of other use cases.
