A Bank of England (BoE) official has said that a digital version of the British pound could soon be used in wholesale markets, potentially bringing the UK closer to a central bank digital currency (CBDC ) .
The comments on the digital pound were made by the Bank of England’s deputy governor for financial stability, John Cunliffe, who in a speech in Monday called it a “misunderstanding of the Bank’s position” to suggest that policymakers are considering CBDC only in the context of retail trade.
According to a transcript of the speech, Cunliffe said:
“We are acutely aware of the potential transformative impact on wholesale financial markets of financial asset tokenization, atomic calculations, smart contracts and other emerging technologies.”
He added that the bill, currently before parliament, would allow the central bank to create a regulatory sandbox that developers could use to “explore ideas like collapsing trading and settlement into an instant smart contract.”
Later in his speech, the deputy governor of the Bank of England explained that one way to achieve this is for the central bank to tokenize its reserves – what he calls “wholesale money” – and develop a registry system to transfer these tokens between wholesale participants. market
“We, like other central banks, studied such options,” he said.
A digital pound could happen this decade
Cunliffe’s comments are not the first time Bank of England officials have hinted at the possibility of a CBDC launch in the UK.
Back in February of this year, news reports suggested that a digital version of the pound was in the country’s plans, and that it could be launched “later this decade.”
The bank and the Treasury Department will create a roadmap for the “potential introduction of a new central bank currency,” the report said at the time, suggesting it was still only a possibility.
