Her Majesty’s Treasury and the Bank of England have revealed the establishment of a central bank digital currency (CBDC) taskforce. According to the announcement, the group’s purpose aims to explore a potential UK CBDC.
UK Entities Invoke a CBDC Taskforce to Explore a Central Bank-Issued Digital Currency
Central bank digital currencies (CBDCs) have been popping up throughout a number of countries and most are still in the exploration phase. A few countries like Venezuela, Sweden, and China are ahead of the game by a longshot in comparison to countries like the U.S., Canada, and the United Kingdom. On Monday, the HM Treasury and the Bank of England (BoE) published an announcement indicating that it plans to join the CBDC race.
The two UK entities have established a CBDC taskforce as the Exchequer says the group will be dedicated to “the exploration of a potential UK CBDC.” The press release wants the public to know that bureaucrats and the BoE have “not yet made a decision on whether to introduce a CBDC in the UK.” However, the taskforce is meant to strategically approach the idea and “promote close coordination” between officials exploring a UK-based CBDC.
The CBDC taskforce will be co-chaired by Jon Cunliffe the Deputy Governor of the Bank of England and Katharine Braddick the HM Treasury’s Director General of Financial Services. “Full membership of the taskforce will be limited to relevant individuals from the Bank of England and HM Treasury,” the announcement details. “Other UK authorities will be involved in the taskforce’s work on CBDC as appropriate, and will be invited to meetings when relevant. The Bank of England and HM Treasury will jointly provide secretariat duties,” the Exchequer’s announcement notes.
A CBDC Will ‘Secure the UK’s Title as a World Leader for Fintech Innovation’
In a note to Bitcoin.com News, Jorge Lesmes, Global Head of Blockchain Banking Practice at Everis believes the HM Treasury’s and BoE’s recent announcement is positive. “The UK is a world leader for fintech, and the implementation of a Central Bank Digital Currency (CBDC) would help secure this title,” Lesmes explained. “With the Covid-19 pandemic accelerating our transition away from physical fiat and enhancing the customer appetite for convenient, tech-driven access to financial services and digital payments, the introduction of a CBDC would be key in meeting these shifting consumer demands,” he added.
The Everis executive continued:
However, the first stage of implementation is likely to arrive with commercial banking, for interbank settlements, before retail banks benefit from the uses of a digital currency. Of course, the introduction of a CBDC will not come without its risks. For this partnership to succeed, the newly established taskforce must examine how the UK government will work alongside the Bank of England, to ensure that all potential risks have been considered and that the correct regulation is in place to eliminate threats and maintain value.
Members of the HM Treasury and BoE effort plan to evaluate design features to achieve specific goals. The CBDC will need “rigorous, coherent and comprehensive assessment,” the Treasury insists. Both entities will also participate in engaging with CBDC stakeholders. Furthermore, the organizations will monitor the CBDC developments in order to make sure the UK “remains at the forefront of global innovation.”
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