UK Initiates Benefit Assessment for Digital Pound CBDC Rollout


The United Kingdom is intensifying efforts to evaluate the potential benefits of launching a Central Bank Digital Currency (CBDC), known as the digital Pound. Responding to an order from the UK Parliamentary Committee and the House of Commons, the Bank of England and the UK Treasury have conducted an analysis to understand the advantages associated with introducing the digital Pound CBDC. This proactive approach aims to prevent unnecessary expenditure on CBDC pilot programs and trials.

The Bank of England has initiated a comprehensive examination of the CBDC, enlisting the expertise of MIT to assess the pros and cons. The primary focus of this scrutiny includes understanding the benefits related to issuance, distribution, and privacy, integrating the digital Pound into the existing financial system.

The House of Commons Treasury Committee highlighted the potential benefits of a wholesale CBDC, emphasizing advantages in wholesale payments such as reduced settlement times and counterparty risks. The proposed model for the digital pound involves a ‘platform model,’ where the Bank of England provides the core public infrastructure and issues digital pounds recorded in a ‘core ledger.’

CBDCs, representing digital versions of fiat currencies on blockchain networks, hold the potential to assist nations in achieving environmental goals and reducing reliance on paper currency. Additionally, the immutable transactional history associated with CBDCs enhances transparency in record-keeping.

As part of the assessment, the Bank of England stated that CBDCs could alleviate higher payment costs for smaller merchants. The introduction of the digital pound could lead to market concentration, support financial inclusion, and enhance the resilience of domestic and cross-border payments.

While there is no concrete timeline for the readiness of the digital pound, the assessment report emphasizes that the UK, like the United States, is not rushing to establish its CBDC urgently.

Treasury chief Jeremy Hunt commented in February, “While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible and easy to use. That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”

Benjamin Turner

Benjamin Turner is a journalism graduate with keen interest in covering Technology news – specifically wall street business. He has as a keen eye for technologies and has predicted quite a few successful startups over the last couple of years. Benjamin goal with this website is to report accurately on all kinds of stock news, and have a great deal of passion for Technology news reporting. Benjamin is diligent and proactive when it comes to Technology news reporting.

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