A Bank of England (BOE) official has said that a digital version of the British pound could soon be used in wholesale markets, potentially moving the UK closer to a central bank digital currency.cbdc,
The comments about the digital pound were made by John Cunliffe, deputy governor of the Bank of England for financial stability, who speech On Monday it was called a “misunderstanding of the bank’s position” that policy makers were only considering CBDCs in a retail context.
According to a transcript of the speech, Cunliffe said:
“We very clearly recognize the potential transformative impact on wholesale financial markets of tokenization of financial assets, atomic settlement, smart contracts and other emerging technologies.”
He added that a bill now under consideration by parliament would allow the central bank to set up a regulatory sandbox that developers could use to “explore ideas such as trading and settlement in real-time smart contracts.”
Further in the speech, the BoE deputy governor explained that one way to go about this is for the central bank to tokenize its reserves – what he calls “wholesale money” – and to transfer these tokens between participants in bulk. To develop a bookkeeping system for the market.
“We, like other central banks, are exploring such options,” he said.
Digital pound could launch in this decade
Cunliffe’s comments are not the first time a Bank of England official has hinted that a CBDC could be launched in the UK.
Back in February this year, a news report stated that a Digital version of the pound was in the plans for the country, and it could launch “late this decade”.
The report added that the bank and Treasury would be drawing up a road map to “potentially introduce a new central bank currency”, suggesting this is still a possibility.