Bank of England set to launch CBDC consultation in 2022

The Bank of England (BofE) has revealed it intends to launch a consultation to set out their assessment of the case for a UK central bank digital currency (CBDC) next year.

The consultation – which will be launched alongside Her Majesty’s Treasury – will examine the merits of further work to develop an operational and technology model for a UK CBDC, and will also evaluate the issues surrounding it, consider high-level design features, user and business implications and possible benefits.

According to the BofE, this consultation will form part of a research and exploration phase and will help to inform policy development over the next few years. Earlier this year, the BofE and HMT created the CBDC Taskforce to coordinate exploration of a potential UK CBDC.

CBDC would be a new form of digital money issued by the BofE and for use by households and business for their everyday payments needs. It would exist alongside cash and bank deposits instead of replacing them.

The bank added that the 2022 consultation will inform a decision on whether the authorities determine they are content to move into the ‘development’ phase, which it claims would take several years. Following the consultation, a technical specification would follow, which would explain the proposed conceptual architecture for any CBDC.

Economic Secretary to the Treasury John Glen said, “This consultation will begin an open discussion on the role a UK central bank digital currency might play in the UK. I’d encourage everyone to contribute to the discussion so we can explore the opportunities this could bring, as well as understanding any risks it may pose.”

BofE Deputy Governor for Financial Stability Jon Cunliffe added, “The plan to publish a consultation next year on CBDC is a crucial step in our policy development, especially as we further our thinking on the pressing issues at hand. What it will do is provide a platform for interested parties and relevant groups to engage with the key questions on the merits of CBDC, and whether the public sector should advance to a development phase.”

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