Bank of England and HM Treasury Announce the Creation of Taskforce to Explore a Central Bank Digital Currency

The Bank of England and HM Treasury have jointly announced the creation of a task force to explore a central bank digital currency or CBDC. The CBDC will be a digital currency issued by the Bank of England for use by consumers as well as businesses. The digital pound would exist alongside deposits, said the bank – rather than replace them. The UK Government has not yet made a decision on whether to introduce a CBDC in the UK.

The Bank of England has also announced it will establish a CBDC Unit, a new division of the Bank. It will lead its internal exploration around CBDC. The Deputy Governor for Financial Stability, Jon Cunliffe, will oversee the work of the CBDC Unit.

The Taskforce’s mission will be:

  • Coordinate exploration of the objectives, use cases, opportunities, and risks of a potential UK CBDC.
  • Guide evaluation of the design features a CBDC must display to achieve our goals.
  • Support a rigorous, coherent, and comprehensive assessment of the overall case for a UK CBDC.
  • Monitor international CBDC developments to ensure the UK remains at the forefront of global innovation.

The Taskforce will be co-chaired by Cunliffe, and HM Treasury’s Director General of Financial Services, Katharine Braddick.

The Bank of England has also announced the creation of the following:

  • CBDC Engagement Forum to engage senior stakeholders and gather strategic input on all non-technology aspects of CBDC. The Forum will have an important role in helping the Bank and HM Treasury understand the practical challenges of designing, implementing and operating a CBDC. It will consider issues such as – but not limited to – ‘use cases’ for CBDC, functional needs of CBDC users, roles of public and private sectors in a CBDC system, financial & digital inclusion considerations, and data & privacy implications. Members will be drawn from financial institutions, civil society groups, merchants, business users and consumers.
  • CBDC Technology Forum to engage stakeholders and gather input on all technology aspects of CBDC from a diverse cross-section of expertise and perspectives. The Forum will have an important role in helping the Bank to understand the technological challenges of designing, implementing and operating a CBDC. Members will be invited by the Bank and drawn from a range of financial institutions, academia, fintechs, infrastructure providers and technology firms.

Last year, the Bank of England published a discussion paper on CBDCs indicating a digital pound could be beneficial to consumers and businesses. Many central banks are now investigating the potential for a CBDC with China being the largest country that is working on a digital yuan as well as testing the technology. 

The combination of central bank interest and private firms issuing stablecoins has compelled policymakers around the world to dedicate resources to investigating the possibilities of digital currency.

The Bank of England has created an information page outlining the task force as well as CBDCs.

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