The Bank of England (BoE) and His Majesty’s Treasury will unveil a roadmap to develop a central bank digital currency (CBDC) next week, according to The Telegraph on February 4. The Bank of England and the Treasury plan to launch a four-month consultation in which businesses, academics, and the general public will be invited to share their thoughts on the introduction of a “digital pound,” according to the report.
The digital pound is being considered due to falling cash usage in the United Kingdom — cash now accounts for only 15% of all transactions in 2021, down from over 50% in 2011.
According to The Telegraph, citing the yet-to-be-released consultation paper, BoE governor Andrew Bailey and chancellor of the Exchequer Jeremy Hunt believe the UK will “likely” require a CBDC. In their consultation paper, Bailey and Hunt state:
“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 news comes nearly two years after Prime Minister Rishi Sunak appointed a task force as chancellor to decide whether the UK should establish a CBDC.
While Bailey and Hunt believe it is “too early” to commit to building the infrastructure for a CBDC, they are “convinced” that additional work is “justified.”
According to the report, the BoE and Treasury will begin the CBDC project’s “design” phase, which will create a blueprint for how the digital pound could be built and used.
According to the report, the CBDC will take years to develop, and officials believe 2025 is the “earliest” the BoE can begin building and testing a prototype. However, the final decision on whether or not to issue a digital pound will not be made until then. According to the report, a CBDC will also necessitate significant public investment.