The Bank of England has joined forces with other central banks to contemplate launching their own digital currencies.

The Bank of England will work alongside the Canada, Japan, Eurozone, Sweden and Switzerland central banks, as well as the Bank for International Settlements, with the group co-chaired by former executive of the European Central Bank Benoit Coeure and Bank of England deputy governor Jon Cunliffe.

This group will fuel rumours that central banks are aiming to limit the possible influence of Facebook’s libra currency, set to launch in 2020, as well as other digital currency proposals by a group of banks including UBS, City AM reports.

A central bank digital currency (CBDC) would allow businesses, individuals and financial companies, other than big banks, to make payments and store value in electronic central bank money.

Many central banks are of the opinion that CBDCs would greatly increase efficiency and reduce costs. 

According to Marcus Swanepoel, chief executive of cryptocurrency firm Luno, the current international monetary system is “out of date”. He stated: “Businesses and individuals need cheaper, faster, secure and more inclusive access to money.”

A number of central banks have been advancing with their digital currencies for some time. It is widely perceived that China is out in front.

In addition, plans for an “e-krona” are also being developed by Sweden’s Riksbank.

Bradley Rice, senior associate at law firm Ashurst stated that the initiative by the Bank of England makes sense: “The Bank has trialled proof of concepts for digital currency in the past but the technology was not there,” he said.

“We have seen significant advances in blockchain and associated technologies – now might be the right time to try again.”

deVere founder and CEO, Nigel Green stresses the rising demand for digital currencies: “The demand for digital, global, borderless currencies is only going to increase. This is inevitable as the digitalisation of our economies and our daily lives grows further and picks up pace further still.

“And because demand is set to soar over the next few years as retail and institutional investors pile into crypto, lawmakers now need to embrace them and bring them fully into the mainstream financial system with proper and robust regulation.”