BoE Lacks Tech Skill To Issue CBDC – Deputy Governor
During a treasury committee hearing on Tuesday, the deputy governor of the Bank of England (BoE), Jon Cunliffe, declared that there is a 50% probability that the U.K.’s central bank will issue a CBDC. However, he added that the regulator lacks the technical expertise required to release a digital currency.
BoE Working Towards The Next Phase Of CBDC Development
According to Cunliffe’s statement, the BoE is working towards acquiring the essential expertise required to proceed with its CBDC development. Also, the central bank intends to test a prototype digital pound in collaboration with partners in the private sector.
The deputy governor explained that the subsequent stage involves constructing a functional prototype. The BoE will test this prototype in a simulated environment before moving on to live testing and implementation.
“The purpose of this phase is to equip them with the necessary knowledge and skills needed to accomplish these objectives,” he added. The deputy governor emphasized that the framework and design of a possible digital Pound would differ considerably, depending on the CBDC’s objective.
He stated that the primary aim of the BoE is to offer digital cash, which is the digital version of BoE notes, for payment purposes. He further explained that the central bank wants to avoid having two types of money in circulation, one that is remunerated and the other that is not.
Additionally, they do not want to create a product that looks like a savings product.
CBDC To Revolutionize How People Use Money
Meanwhile, Cunliffe listed several potential functions and advantages of CBDC that are not presently available in the current financial system. Drawing a comparison between a likely digital pound and Apple’s app store, Cunliffe explained that CBDCs offer a new horizon for enhancing payments and revolutionizing how people use money.
In addition, the deputy governor cited micropayments as a significant potential use case for a digital pound. He explained that it would make it considerably easier for individuals to make small payments, such as paying a tiny fraction to read a newspaper article without subscribing to the entire publication.
Cunliffe’s suggestions come when the U.K. government has become increasingly engaged in CBDC development, with the Treasury initiating a role to oversee the development of a digital pound in January 2023. Reports revealed that Andrew Bailey, BoE Governor, had reservations about the need for a CBDC soon.
According to him, the present conventional payment system is enough to cater to the financial needs of the people. On the other hand, European finance ministers have recently reaffirmed their backing for a retail version of the digital Euro.
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