The roadmap to a digital pound has been revealed

By Ian Silvera

Couched in caution and caveats, the UK government has quietly revealed more information about plans to launch a retail central bank digital currency (CBDC).

The digital money would be denominated in Sterling and issued by the Bank of England, as is the case with the UK’s existing money supply. The main use case? Like all forms of cash, for use by people and businesses for their everyday payments needs.

We already know that a CBDC Taskforce, launched by the Treasury and Bank of England in April, is hard at work. The group, among other things, is monitoring the international CBDC developments, guiding an evaluation of the design features of the CBDC and coordinating exploration of the objectives, use cases, opportunities, and risks for a potential UK CBDC.

Crucially, the Taskforce will ensure that UK authorities adopt a strategic and coordinated approach as they explore a CBDC, in line with their statutory objectives.

No decision has yet been made by the Bank of England, or the Taskforce on issuing a UK CBDC. However, thanks to a question to the government in the UK parliament, we now know that Boris Johnson’s administration expects this process to take “several years”.

As part of those next steps, the UK Treasury and Bank of England will publish a consultation in 2022. This exercise will allow industry and others to reply to the bodies’ assessment of the case for a UK CBDC.

Next, there would be a development phase, with the Bank of England publishing a technical specification to explain the proposed architecture of the UK CBDC. This could involve testing and feasibility studies of the CBDC, followed by a building stage.

The long and short of it however, is that a UK CBDC won’t be hitting our waters until at least 2025.