UK establishes specialized agency to consider central bank digital currency
On April 19, 2021, the UK
Bank of England statement on Central Bank Digital Currency | Bank of England
https://www.bankofengland.co.uk/news/2021/april/bank-of-england-statement-on-central-bank-digital-currency
Terms of Central Bank Digital Currency Taskforce: Terms of Reference --GOV.UK
https://www.gov.uk/government/publications/terms-of-central-bank-digital-currency-taskforce-terms-of-reference
Bank of England, HM Treasury establish new taskforce to explore digital currency
https://www.theblockcrypto.com/post/102109/bank-of-england-hm-treasury-new-taskforce-cbdc-digital-currency
Bank of England issues discussion paper on central bank digital currency
https://www.theblockcrypto.com/post/58530/bank-of-england-issues-discussion-paper-on-central-bank-digital-currency
CBDC is a digital currency issued by the central bank and backed by a specific state. Unsupported ones are called virtual currencies and are distinguished. The introduction of the CBDC has begun to be considered in each country, and in October 2020, the Bahamas issued the CBDC for the first time in the world . In preparation for the 2022 Beijing Olympics, China is planning to make CBDC available not only to domestic users but also to overseas users.
The UK has not yet decided whether to follow this trend and issue a CBDC. The Ministry of Finance and the Bank of England have set up this task force to consider issuing a CBDC, and will conduct a wide range of research on the benefits, risks and practicality of introducing a CBDC.
The Task Force is involved in all non-technical aspects such as the 'Technology Forum', which is involved in the technical aspects of CBDC design, implementation, and operation, the role of the public and private sectors in the introduction of CBDC, and the impact of data and privacy. It is divided into 'engagement forums', and members are selected from various financial institutions, academic societies, technology companies, and industry stakeholders.
The Task Force is co-chaired by the Deputy Governor of the Bank of England and the Director of Financial Services at the Ministry of Finance, both agencies 'will seek cooperation from other UK authorities.' The two institutions also said that if the CBDC were to be issued, it would be used in parallel with cash and digital currencies instead of replacing cash.
The Bank of England said, 'We are interested in the CBDC because of technological innovations in payment methods and reduced use of cash. CBDC has its benefits, but how will it affect monetary policy when it is introduced? We need to consider whether it will affect us and how we will implement monetary policy in the future. '
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