U.K.’s Central Bank Issues Discussion Paper on CBDC
U.K.’s central bank, the Bank of England (BoG) has, on March 12, officially issued a discussion paper on digital currency. It is a 57-page document which outlines an illustrative model of central bank digital currency (CBDC). The BoG said CBDC would be an electronic form of central bank money and that is designed to store value and enable payment by individuals and businesses.
According to the BoG, CBDC could present several opportunities, including a more resilient payments system, and a building block for better international payments in the future. The BoG however acknowledge that CBDCs poses challenges and risks such as impacts on monetary policy and financial stability.
The BoG claims it’s interested in CBDC because we are in a period of significant change in money and payments. It admitted that the use of banknotes is declining, while usage of privately issued money is on the rise due to technological changes.
The U.K. central bank notably acknowledged that a CBDC would be an innovation in both monetary form provided to the public, as well as the payments infrastructure on which payments can be made.
As it stands now, the BoG has not yet decided on whether to introduce CBDC. However, the central bank claims if it were to issue a digital currency, it will be denominated in Pounds Sterling. This implies that, £10 of CBDC would always be equivalent to £10 banknote.
Featured image courtesy of Shutterstock. Source: Cryptopress.