Shortly after disclosing plans to investigate how to utilize a CBDC and issue a digital pound, authorities from the Bank of England (BoE) and the UK Treasury stated that having a central bank digital currency in the United Kingdom could provide lucrative opportunities for businesses located in the area.
Ben Broadbent, who serves as the deputy governor for monetary policy at the Bank of England, believes there would be a lot of benefits to switching to a digital form of the pound.
Specifically, the digital pound would present businesses with a quicker alternative to making payments online and reduce the costs associated with corporate settlement.
In addition to this, it would assist in maintaining the monetary equilibrium of the pound.
As per (1) Ben Broadbent:
“The lessons that may be learned from the application of digitalization to date are that new goods and services made possible by new technology can be accepted quickly and on a large scale.
It should come as no surprise that this opens up prospects for enterprises, individuals, and financial institutions.
We anticipate ongoing improvements, as well as reductions in complexity and the cost of payments.
The moniker “Britcoin” has already been given to the digital representation of the pound currency. It is anticipated that it will go live before the year is up.
But, the exact date has not been disclosed just yet because much research is still needed.
Governor Andrew Bailey of the Bank of England has stated that the central bank will investigate a variety of alternative ramifications for the technological work surrounding the introduction of the digital pound.
The central bank’s work on the electronic version of the pound sterling (e-GBP) will form the basis for the road that the country will take toward adopting CBDC.
UK’s Quest for CBDC
Currently, 114 countries, which account for more than 95% of global GDP, are investigating a CBDC.
As many as 11 nations have successfully established their own digital currency, while over 60 nations are currently at an advanced stage of CBDC research and development.
Since June 2021, work on the digital version of the pound has been ongoing in the United Kingdom.
According to the Bank of England, introducing a digital version of the pound would ensure that the general population would continue to have access to retail central bank money and foster greater innovation, variety, and efficiency in domestic payment systems.
The value of the new digital version of fiat money would be the same as that of cash.
Alongside the introduction of the digital pound, the Bank of England intends to release a digital wallet, which will function in a manner analogous to that of a cashless payment app and make it simpler for users to spend their assets.
The consultation paper regarding the digital pound released on February 7 by the Bank of England and the UK Treasury is the most recent piece of information regarding this topic.
Despite the numerous consultations that have taken place on the topic, the initiative is not yet ready.
Although there is optimism that the digital pound will be completed by the end of this year, authorities anticipate that 2025 is the earliest year in which the BoE will be able to begin the process of manufacturing and testing a prototype.
The work will now enter the design phase, expected to last for two to three years.
It will involve a more in-depth look at the prerequisites for a digital pound in terms of both technology and policy.