The Bank of England (BoE) and His Majesty’s Treasury will introduce a roadmap to build a central bank digital currency (CBDC) next week, The Telegraph reported on Feb. 4. The BoE and Treasury are looking to launch a four-month consultation in which businesses, academics, and the wider public will be invited to share views on the launch of a “digital pound,” the report said.
The digital pound is being considered due to the falling cash usage in the U.K. — cash now accounted for only 15% of all transactions in 2021, compared to over 50% of transactions in 2011.
Citing the yet-to-be-released consultation paper, The Telegraph reported that BoE governor Andrew Bailey and chancellor of the Exchequer Jeremy Hunt believe the U.K. will “likely” need a CBDC. Bailey and Hunt note in the consultation paper:
“On the basis of our work to date, the Bank of England and HM Treasury judge that it is likely a digital pound will be needed in the future.”
The development comes nearly two years after Prime Minister Rishi Sunak had set up a task force as chancellor to decide whether or not the U.K. should create a CBDC.
The consultation paper notes that while Bailey and Hunt believe it is “too early” to commit to building the infrastructure for a CBDC, they are “convinced” further work is “justified.”
According to the report, the BoE and Treasury will begin the “design” phase of the CBDC project to create a blueprint of how the digital pound could be built and used.
The report said that creating the CBDC will take years, and officials believe 2025 is the “earliest” the BoE can start building and testing a prototype. However, the final decision on whether or not a digital pound will be issued will not be taken until then. A CBDC will also require significant public investment, the report said.
According to the report, if the digital pound gets the final approval, it could be launched by 2030. The BoE had previously said that the earliest U.K. could be expected to launch its CBDC was “the second half of the decade.”
