Bank Of England Doesn't Have The Staff For CBDC Right Now -

Bank Of England Doesn’t Have The Staff For CBDC Right Now

Updated: 02 March 2023

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The United Kingdom is not yet prepared to issue a central bank digital currency (CBDC). According to the Deputy Governor, Jon Cunliffe, the Bank of England (BoE) needs more expertise. During the treasury select committee hearing on February 28, the deputy governor noted that ”there is a 50% chance that the central bank of the United Kingdom would issue a CBDC. However, the regulator doesn’t have the technical skills to issue the currency yet.”

BoE deputy governor Jon Cunliffe has provided some potential CBDC functions and benefits that are currently not present in the existing financial system. https://t.co/kyyRSdmGcc

— Cointelegraph (@Cointelegraph) February 28, 2023

However, the BoE expects to acquire the necessary expertise to proceed with the CBDC development in the next phase. Notably, the central bank is planning to test a future digital pound with partners from the private sector. These would include creating a working prototype, testing a simulated environment and then testing in a live environment, and finally, implementing the results.

Additionally, Cunliffe asserted that the design and structure of potential digital would vary depending on the motivation of the CBDC. Notably, the main aim of BoE is to provide digital cash, or the equivalent of BoE notes, for general payment reasons. Cunliffe further noted:

We did not want a system in which two forms of Bank of England money were circulating, remunerated and unremunerated. Additionally, we did not want a system where we would be producing something which would resemble savings products.

The deputy governor further highlighted some CBDC functions and benefits currently unavailable in the existing financial system.

Cunliffe compares the digital pound with the iPhone app store

The BoE deputy governor compared a potential digital pound with Apple’s iPhone app store. However, he noted that CBDC is about ”opening a new frontier for individuals to improve payments and how money is used.” The deputy governor added that micropayments could be a significant potential application for a digital pound. Further, he gave an example, noting:

This will be much easier for you to make small payments. So if you wanted to go through an article in a newspaper, you wouldn’t have to subscribe to the newspaper. One would require to pay a tiny fraction to do that.

However, recently the BoE governor, Andrew Bailey, expressed his doubts about the necessity of a CBDC in the short term. On the other hand, the European finance ministers showed their support for a retail version of the digital euro. Reportedly, on January 16, the European finance ministers issued a joint statement backing the central bank’s development process towards a digital euro project while acknowledging some uncertainties and challenges.

The BoE governor gave his view to the British Parliament’s Treasury Select Committee, noting that he didn’t think a CBDC version of a digital pound was needed. He further stipulated that” the UK already has a wholesale central bank money settlement system with a major upgrade.” Bailey further noted that there are no plans to abolish cash for retail use and does not believe that retail payments need changes. However, the deputy governor, Cunliffe asserted last year that the country might need a digital pound.

The UK government’s involvement in CBDC development

However, the news of the UK needing more tech skills comes as the UK government is increasingly involved in the CBDC development. This comes as His Majesty’s Treasury opened for a head of central bank digital currency position (CBDC) to lead the development of a digital pound in late January.

As per the LinkedIn post, the Treasury and the Bank of England are simultaneously working together via the CBDC task force to explore the digital pound case. The work is described as ‘’important, complex and cross-cutting.’’ Further, the work would require extensive engagement across and beyond the HM Treasury.