Yesterday, the UK Treasury Committee held a hearing with officials from the Bank of England (BofE) to discuss the subject of Central Bank Digital Currencies (CBDCs). Sir Jon Cunliffe, Deputy Governor for Financial Stability shared the Bank’s position on the ongoing consultation around a potential digital pound. When pressed, he said the Bank believes there’s a more than 50% chance that a retail CBDC will launch in the future. He outlined the potential upside of the new form of payment.
In the first round of questions, the Bank officials were asked about the ambivalent tone of the consultation paper, which argued that, while a CBDC is likely to be needed, the decision on whether the BofE should launch one has not yet been taken. Sir Cunliffe defended the Bank’s position arguing that this stems from the fact that many of the trends in the economy, society, and technology are still evolving. A CBDC represents a major public infrastructure project that cannot simply be rushed out. Hence, advance preparation is needed. However, “it would be complacent to assume that those new technologies will not develop and that people will not find ways to integrate payment operations much more deeply into digital platforms,” said Cunliffe, so a forward-looking assessment is essential.
Overall, the BofE points to huge benefits for the economy and society. CBDCs would allow for things like micropayments, automated delivery systems, and programmable money. But rather than addressing a particular consumer need or market failure, the Bank stresses that “this is about opening a new frontier for people to improve payments and the way in which money is used,” said Cunliffe.
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