The Bank of England (BoE) and the Treasury are convinced that a central bank digital currency (CBDC) is becoming increasingly necessary, an unpublished report seen by the Daily Telegraph suggests.
“On the basis of our work to date, the Bank of England and HM Treasury judge that it is likely a digital pound will be needed in the future,” the Telegraph quoted BoE governor Andrew Bailey and Chancellor Jeremy Hunt as saying in the report.
“It is too early to commit to build the infrastructure for one, but we are convinced that further preparatory work is justified,” the report said.
The Telegraph suggested that the report could be published as soon as next week, with the ‘digital pound’ potentially ready by 2030.
The Bank’s deputy governor Jon Cunliffe is due to give a speech on Tuesday updating the Treasury on the Bank of England’s CBDC work.
Last month, the Treasury said it was looking to appoint a head of central bank digital currency, signalling the department’s focus on the issue.
“The successful candidate will be responsible for leadership of HM Treasury’s work on a potential digital pound – a UK central bank digital currency,” the job advertisement posted on Linkedin said.
CBDCs are digital tokens, similar to cryptocurrency, but issued by a central bank. They are pegged to the value of the country’s fiat currency.
Many countries are exploring the possibility of using CBDCs. China has been testing the use of CBDCs since 2020. In October last year, CBDC spending in China reached over 100bn yuan.
There are concerns that the UK is falling behind on the use of both public and private digital currencies. Industry figures criticised the government’s new crypto regulations for progressing too slowly last week, warning the government was only taking “baby steps”.
However, in a Treasury committee hearing in January, City minister Andrew Griffith said “I don’t accept the implied criticism that by spending time with the industry at this stage, that we’re doing anything wrong.”
On CBDCs, Griffith said he would “rather be right than first” on CBDCs, despite the progress made in China, USA and Europe.
The Bank of England was contacted for comment.