In a recent media interaction, Ben Broadbent, deputy governor for monetary policy and the Bank of England (BoE) commented on the British central bank digital currency (CBDC). He stated that the central bank is paying keen attention to rolling out its CBDC.
According to Broadbent, the rollout of the British CBDC will bring benefits to the larger financial ecosystem by facilitating elements such as smooth and easy payments. He also counted on several advantages that the new technology would bring with itself. He said:
The experience of digitalization so far is that new products and services enabled by new technologies can be adopted very rapidly at scale. This obviously brings opportunities for financial institutions, for businesses, for individuals. We would expect to see continued improvements, reductions in friction, and cost of payment.
The central banker also revealed that the institution is exploring regulations of payment technology systems such as CBDCs. Notably, the British regulators and Treasury previously announced that the institutions in the nation were exploring the viability of a CBDC.
In early February, the Bank of England and the British Treasury released a formal consultation paper to create the pathway for the rollout of a CBDC that could operate alongside the region’s fiat currency. Jeremy Hunt, the chancellor of the exchequer, and Andrew Bailey, governor of the Bank of England, say that the government could still decide against a CBDC; the consultation paper argues that a digital Pound will be needed at some point in the future.
Eventually, Hunt stated that the two organizations are looking to develop a modernized digital payment system that doesn’t eliminate the use of cash. The primary objective is to provide a government-backed alternative to privately issued stablecoins, with BoE and Treasury officials expecting Big Tech companies to develop them in the coming years. The CBDC consultation paper read:
At this stage, we judge it likely that the digital pound will be needed in the future. It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified.
In February, soon after the launch of the consultation paper, the central bank said that they do not want to refer to the country’s CBDC as “Britcoin.” The bank’s comments come in response to the wide usage of the term “Britcoin” by the British and international media – including CNN, ABC News, The Guardian, The Daily Mail, and many others. The resemblance to the term “Bitcoin” has brought concerns to the bank’s deputy governor, John Cunliffe, as the public might make unfavorable comparisons.
Notably, Rishi Sunak, the prime minister of the United Kingdom challenged the central bank to explore CBDCs in 2021 when he was the finance minister. Now, in October last year, Andrew Griffith, Britain’s financial services minister, noted that the region could not avoid the issue of CBDC at a time when other global regulatory banks are advancing their research into it.
Moreover, the Bank of International Settlements has also acknowledged the increasing global interest in CBDCs. It pointed out that CBDCs are essential in modernizing finance and also announced its plans to increase its focus on Central Bank Digital Currencies (CBDCs) in 2023. This move is aimed at improving payment systems through the bank’s Innovation Hub. Reportedly, the BIS will focus on retail CBDCs and will experiment with the distribution of a retail CBDC through an open API ecosystem in a joint experiment with the Bank of England.