The Bank of England and HM Treasury have announced a consultation process that will inform a decision about whether the UK should proceed to design and create a central bank digital currency (CBDC).
The financial orgs created a taskforce to consider a CBDC in April 2021, and promised to "engage widely with stakeholders on the benefits, risks and practicalities" of such a move.
Wags quickly labelled the currency "Britcoin". Not much has been heard since.
However on Tuesday the two organisations piped up with news that the next steps in their exploration will commence in 2022 and comprise "a consultation which will set out their assessment of the case for a UK CBDC, including the merits of further work to develop an operational and technology model for a UK CBDC.
"It will evaluate the main issues at hand, consider the high level design features, possible benefits and implications for users and businesses, and considerations for further work."
The consultation will "inform a decision on whether the authorities are content to move into a 'development' phase".
A new form of digital money for use by households and businesses for their everyday needs
Neither the Bank of England announcement nor economic secretary to the treasury John Glen's statement state who will be consulted, or what criteria the consultation will consider as it considers whether to continue work on a CBDC.
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If those mysterious criteria are met, the Bank and Treasury plan to develop a technical specification "explaining the proposed conceptual architecture for any CBDC" would be the next deliverable. "This could involve in-depth testing of the optimal design for, and feasibility of, a UK CBDC," their statements read.
Both documents also state that minting Britcoin would be "a major national infrastructure project" – presumably something that couldn't be knocked off in short order.
But if the currency does come about, both documents state it will become “a new form of digital money issued by the Bank of England and for use by households and businesses for their everyday payments needs." The documents suggest coexistence between Britcoin and existing cash and bank deposits, rather than the new currency replacing the old.
While the UK ponders whether to develop a CBDC at all, the governor of the People's Bank of China, Yi Gang, on Tuesday told the Bank of Finland Institute for Emerging Economies (BOFFIT – the nation's central bank) that China will continue prudent research and development on its own CBDC – the Digital Yuan. Yi said the People's Bank wants to address privacy issues, ensure it is less susceptible to counterfeiting, and improve integration with other payment tools. ®