The Bank of England and Britain's finance ministry say they plan to hold a formal consultation next year on whether to move forward with a central bank digital currency.
Central banks around the world, including the Bank of Canada, are studying digital versions of their currencies to avoid leaving digital payments to the private sector as the decline of cash has accelerated in some cases due to the global pandemic.
The consultation paper will set out an assessment from the ministry and Bank of England regarding the case for a digital currency before a decision on whether to proceed is made. And, England’s central bank has said that no digital currency is likely to be implemented before 2025.
Britain’s Financial Services Minister John Glen said a retail digital currency would be used by people and businesses for their everyday payment needs and help Britain stay at the forefront of innovation and technology in the financial sector.
The European Central Bank in July took a first step towards launching a digital version of the euro currency, kicking off a 24-month investigation phase to be followed by three years of implementation.
While China has been at the forefront of a digital currency, the U.S. Federal Reserve has been more skeptical of such a move.
Some central banks have warned that widespread use of digital currencies could hollow out commercial banks, depriving them of a cheap and stable source of funding such as retail deposits.
