The Bank of England and the Treasury want to create a central bank digital currency!

Digital currency is a type of currency available only in electronic or digital form. Over the years, there has been growing interest in cryptocurrencies such as Ethereum and Bitcoin. Digital currencies are gaining immense popularity that leads several central banks across the globe to work on or contemplate launching their own versions of cryptocurrencies. The central banks are working on a regulated version of cryptocurrencies known as central bank digital currencies. The respective central banks of the country will operate CBDC.

Keeping in view the trends of CBDC, the Bank of England and HM Treasury announced the creation of a joint task force to evaluate issuing of a central bank digital currency (CBDC) that functions similar to fiat currency.

BoE is the government’s bank and lender of last resort that oversees the monetary policy of the country. On the other hand, HM Treasury (Her Majesty’s Treasury) is the government’s finance and the economic ministry that maintains control over the public spending, financial services policy, strategic oversight of the UK tax system, and ensures sustainable economic growth.

Recently, the HM Treasury and Bank of England have revealed the establishment of a joint task force for the evaluation of CBDC. The task force aims to look at the opportunities and risks of creating its own digital currency. According to the information released by BoE, this digital money will not replace cash or bank receipts but it will be used by households and businesses alongside the existing currency. The task force will chaired by the Deputy Governor for Financial Stability, Jon Cunliffe at Central Bank, and Director General of Financial Services, Katherine Braddick at HM Treasury.

The Bank of England has announced the creation of the CBDC Technology Forum and CBDC Engagement Forum to conduct research on digital currency, its worth, and applicability. These forums aim to gather input on all non-technology inputs and the engagement of senior stakeholders to understand the details of creating CBDC. It will help BoE understand the challenges of designing, applying, and operating a central bank digital currency. The central bank also announced that it establish a CBDC unit & members from financial institutions, fintech, academia, and technology firms will be invited.

• It will guide the central bank in the evaluation of designing features of CBDC to deliver its
objectives.
• It aims to support a comprehensive and coherent analysis for UK CBDC.

• The task force will coordinate on exploring potential risks, opportunities, use cases, and
objectives of a UK CBDC.
• The BoE said that the task force also evaluates the international developments of CBDC
and ensures that the United Kingdom is at the forefront of global innovation.

However, the Bank of England and State has clearly stated that it and the Treasury have not yet decided to introduce a central bank digital currency in the UK. The task force will examine all the aspects of CBDC & then a final decision will be taken.