UK’s CBDC scepticism softens as BoE hires digital pound team

The Bank of England is hiring a team to work on the development of a digital pound, making the launch of a retail central bank digital currency in the UK an increasingly likely prospect.

The Times reported over the weekend that the government-backed regulator is looking to recruit up to 30 people to work on a central bank digital currency (CBDC) for Britain that consumers and businesses can safely use in shops or online.

Computer Weekly added later this week that, back in January, the regulator posted a job advert on the Civil Service Jobs site, looking for a ‘digital currency leader with experience of working in financial services or public policy making in a technical subject or a highly regulated sector’.

CBDC is a digital coin issued by a central bank and is linked to the country’s fiat currency. Unlike volatile cryptocurrencies, the digital coin retains its value and would simply be like using cash.

In February of this year, the UK government’s finance department HM Treasury and the Bank of England published a paper stating that a digital pound – or ‘Britcoin’ as some in the media have dubbed it – is likely to be needed soon.

It also confirmed that the design phase of the digital pound project was under way.

This appears to be a far more embracing position than the House of Lords Economic Affairs Committee adopted last year, when it dismissed the concept in a report as “a solution looking for a problem” and one that presented “more risk than reward”.

And yet, just one year later, as the UK becomes an increasingly cashless society the government’s approach appears to be changing – helped perhaps by the fact than the current Prime Minister and former chancellor Rishi Sunak is a keen britcoin champion.

In February’s announcement, Andrew Bailey, the BoE’s governor, acknowledged these trends, saying: “As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow.”

He added: “A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.”

As research has progressed, Bailey also recognised that there were several implications that its technical work will need to consider.

One issue that the UK may need to tackle is the infrastructure behind the digital pound, as Paul Sisnett, CEO of electronic payment network solution paywith.glass – who has been consulting on this issue –  told TechInformed in an interview last year:

“Retail CBDCs require a scalability and need to be able to handle more than 300,000 transactions per second… anyone who thinks that this can be done in six months or by the guys in IT who work in the basement of big banks is kidding themselves.

“It’s not that simple. The People’s Bank of China with the entire nation’s GDP at its disposal, took four years to get to pilot stage,” Sisnett added.

Injecting some realism into the time schedule back in February BoE deputy governor Jon Cunliffe stated that the UK is “at least five years away” from creating a digital pound, but, in his opinion, the creation of a digital currency was “far more likely than not”.