Banking News

UK sets out CBDC next steps. 3+ years away, if at all

digital pound cbdc britcoin

Yesterday HM Treasury and the Bank of England announced the next steps for exploring a retail central bank digital currency (CBDC) or “Britcoin”. After announcing a joint task force earlier this year, the two organizations will publish a consultation in 2022, making their case for continuing work on a digital pound.

Based on the outcome of the consultation, a decision will be made whether to move to the development phase. The earliest possible date for a digital pound would be “the second half of the decade,” said John Glen, the Economic Secretary to the Treasury.

He emphasized that any moves would adhere to the G7 CBDC principles published in October.

The central bank has already created two forums to consult industry and other sectors as part of the research and exploration phase. 

The first Technology Forum took place in September and the minutes were published last month. It outlined multiple possible CBDC models, including an option where the central bank records every payment and balance versus only holding summary records for client-facing institutions. Gross settlement versus deferred net settlement were also discussed.

Ten days ago, CBDC was the topic of a hearing in front of a House of Lords  committee. Former Governor of the Bank of England Mervyn King, now Lord King, was particularly interested in how CBDC will impact the global financial system and whether it will empower a move away from SWIFT and greater payments fragmentation.