BoE considers creation of a CBDC
13 Mar 2020
The Bank of England has requested opinions on the creation of a central bank digital currency (CBDC) as it contemplates implementing its own.
BoE governor Mark Carney said in a discussion paper unveiled on Thursday that although “the creation of a CBDC poses a number of opportunities, it could raise significant challenges for maintaining monetary and financial stability”.
As per a City AM report, a CBDC would offer individuals and businesses a new type of money, creating a new way to make payments, issued by a central bank so it is secure.
The report adds that a central bank currency would totally replace traditional notes and coins, although both forms of currency could be convertible.
The Bank of England is uncertain of the design of the CBDC should the initiative advance, which is why it has requested for the public to get involved and offer their opinion.
A number of central banks, such as those of China and Sweden, are working on launching their own CBDCs. Banks stood up and took notice at the threat of private digital currencies, following the launch of Facebook’s libra.
The BoE governor said a central bank digital currency for Britain “could support a more resilient payments landscape”. He added: “It also has the potential to allow households and businesses to make fast, efficient and reliable payments, and to benefit from an innovative, competitive and inclusive payment system.”
The bank added that a CBDC would not make current payment systems superfluous, although this may be the case over the long-term.
Mark Carney said the CBDC “would need to be very carefully designed if it were to be introduced”.
The Bank of England has asked for written responses from the public in regard to a central bank digital currency for the UK by 12th June.