Bank of England (BoE) Deputy Governor Jon Cunliffe has revealed that the UK central bank lacks the technical expertise to issue a central bank digital currency (CBDC) at present. Speaking to the treasury select committee on February 28, Cunliffe stated that there was over a 50% chance that the bank would eventually issue a CBDC, but that it was not yet ready to move forward with development.
He added that the BoE was seeking to gain the necessary skills by collaborating with private sector partners to test a potential digital pound.
Cunliffe highlighted that the motivations for a potential CBDC would vary widely and said that BoE’s primary aim was to provide digital cash or the digital equivalent of BoE notes for “general payment purposes”. The deputy governor stressed that a key benefit of a CBDC would be the ability to facilitate micropayments, making it easier for people to pay for small items such as newspaper articles. Comparing a potential digital pound with Apple’s iPhone app store, Cunliffe said that a CBDC could open “a new frontier for people to improve payments and the way in which money is used”.
The UK government has increasingly become involved in the development of a digital pound, with the Treasury opening a position to lead the initiative in January 2023. This move has been mirrored across Europe, with the European Central Bank and finance ministers across the region showing support for a retail version of the digital euro.
While the BoE’s CBDC plans progress, others are further ahead in their efforts to launch digital currencies. The Bahamas became the first country to roll out a CBDC last year, with the sand dollar allowing residents to conduct transactions using their mobile phones. Meanwhile, China has been conducting trials of its digital yuan since 2020, with some analysts predicting that it could be launched more widely later this year.