“It is likely a digital pound will be needed in the future,” said Bank of England Governor Andrew Bailey and Finance Minister Jeremy Hunt.
QUICK FACTS:
- The Bank of England, along with the United Kingdom’s Treasury, is planning a digital currency system.
- A central bank digital currency (CBDC) utilizes “blockchain technology currently used by cryptocurrencies to record transfers on a central digital ledger,” The Telegraph explained.
- “It is too early to commit to build the infrastructure for one, but we are convinced that further preparatory work is justified,” according to Bank of England Governor Andrew Bailey and Finance Minister Jeremy Hunt in a report.
- U.K. Prime Minister Rishi Sunak explored digital currency while serving as then-finance minister.
- The Bank of International Settlements, self-described as a “bank for central banks,” said digital currencies are necessary as a means of “modernizing finance.”
- The Bank of England is not looking to open personal bank accounts, but to allow person-to-person payments.
- Due to fears that the new system may replace cash, the UK Parliament passed the Financial Services and Markets Bill to protect a consumer’s ability to use cash payments.
- The digital currency plan is expected to be tested between 2025 and 2030.
COUNTRIES USING DIGITAL CURRENCY:
- According to the Central Bank Digital Currency Tracker, 114 countries either have or are developing a digital currency program.
- Eleven countries already use wide-scale digital currency, including Nigeria, the Bahamas, Jamaica, and the countries in the Eastern Caribbean.
- China leads the world in its pilot program for digital currency with an estimated 260 million users. In 2021, the People’s Bank of China joined with banks in Thailand, the United Arab Emirates, and Hong Kong to create a cross-border currency project.
BACKGROUND:
- American Faith reported that digital currency poses privacy concerns.
- Digital ID and currency programs use personal biometric data, with some saying the identification system mirrors China’s social credit system.
- Several European Union nations are pushing for a digital currency that may be used across national borders and can combine with user identification.
