The Bank of England and the Treasury have announced the creation of a joint taskforce to explore the potential upsides and pitfalls of a UK central bank digital currency (CBDC), referred to as ‘Britcoin’ by chancellor Rishi Sunak.
The taskforce will be jointly led by the Bank’s deputy governor for financial stability, Sir Jon Cunliffe, and the Treasury’s director general of financial services, Katharine Braddick.
The use of cash in financial transactions has been steadily declining in recent years, while debit and credit card payments have been on the rise. This trend has only accelerated during the coronavirus pandemic and has led to a surge in research from central banks into digital payments. The Bank for International Settlements’ (BIS) annual survey into CBDC adoption for 2020 found that 40% of banks interviewed cited the pandemic as the biggest cause driving increased interest.
The announcement may come as no surprise following the head of future technology at the Bank of England, William Lovell, confirming the Bank has been ‘increasing its focus’ on CBDCs at a panel on digital assets at Blockchain Expo Virtual last month.
Despite believing the digitisation of currencies is ‘inevitable’, Lovell and the Bank are still not set on CBDC introduction, saying in a press release that the taskforce ‘will engage widely with stakeholders on the benefits, risks and practicalities’ of potential adoption.
The Bank also announced today the creation of a CBDC engagement forum and a technology forum to engage stakeholders and consider use cases for CBDCs and the technological challenges surrounding implementation.
Although no timeline has been announced for the new taskforce’s plans, experts in the field of digital assets anticipate a steady stream of major announcements over the next few years. At a panel focused on the next five years of CBDCs, Haydn Jones, director and senior blockchain market specialist at PwC, argued that ‘G7 and G20 countries will have to come together and set a standard for CBDCs within the next two years.’
As it stands, 86% of the world’s central banks are exploring the benefits and drawbacks of CBDCs, with only the Bahamas currently having an operational system in the form of their ‘Sand Dollar’. However, China is trailing close behind, with its digital yuan already being piloted in a select few Chinese cities.
Interested in hearing more in person? Find out more at the Blockchain Expo World Series, Global, Europe and North America.
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