Chancellor Rishi Sunak recently announced several significant updates to enhance the UK’s competitive advantage in fintech, one of which pertains to exploration of a retail central bank digital currency (CBDC).
A CBDC is a central bank-issued digital money, denominated in the national unit of account, representing a liability of the central bank and would be available for use by households and businesses. The idea is generating significant interest from central banks across the globe, including the Bank of England (BoE) as Sunak revealed.
Sunak’s announcement outlined the launch of a new fintech taskforce “to coordinate exploratory work on a potential central bank digital currency” led by the UK Treasury and Bank of England. The Taskforce will:
- Coordinate exploration of the objectives, use cases, opportunities, and risks of a potential UK CBDC.
- Guide evaluation of the design features a CBDC must display to achieve our goals.
- Support a rigorous, coherent, and comprehensive assessment of the overall case for a UK CBDC.
- Monitor international CBDC developments to ensure the UK remains at the forefront of global innovation.
In addition, the BoE announced the creation of a CBDC Engagement Forum and a CBDC Technology Forum to engage stakeholders and gather strategic input around the challenges and opportunities the currency presents.