DANIEL SORABJI
- The Bank of England said it will launch a consultation in 2022 on the merits of it issuing its own digital currency.
- There is no decision yet on a 'Britcoin,' which if approved, wouldn't launch until 2025 at the earliest, the central bank said.
- The UK's progress on a digital pound lags far behind China's digital yuan, which has been used for billions of dollars' worth of transactions.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
The Bank of England is moving to the next stage in exploring whether to issue its own digital currency, with plans to launch a consultation next year.
But the BoE cautioned it has not made a decision yet on the digital pound, nicknamed "Britcoin." It also said that if it went ahead, the central bank digital currency, or CBDC, wouldn't launch until the second half of the decade at the earliest.
"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," BoE deputy governor Jon Cunliffe said in the bank's statement Tuesday.
"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," he added.
The consultation, carried out in partnership with the UK's finance ministry the Treasury, will ask for views on the role a UK digital pound might play, and will focus on design, benefits and implications that users and businesses could face.
CBDCs are effectively cryptocurrencies that are pegged to a national currency and controlled by the central bank. They operate as "stablecoins" – a digital token whose value is pegged to an underlying asset. The key difference between a stablecoin and a CBDC is the former is controlled by a private-sector entity.
The consultation follows on from a discussion paper released by the BoE in June as the initial stage in exploring the idea of a potential CBDC. Earlier, in May, Cunliffe said the BoE's digital currency could help the 1.2 million unbanked people in the UK, who rely on cash and cannot access digital payments.
The UK is treading a path toward a CBDC slower than China, which is looking to encourage companies to accept its digital yuan by the 2022 Beijing Winter Olympics. The People's Bank of China has carried out several trials of its digital yuan, which has been used for almost $10 billion in transactions, putting China many years ahead of most developing nations.
The Bahamas has launched its sand dollar, and in late October, Nigeria launched its digital eNaira with the hope of bettering its economy.