The Bank of England and Treasury have shared how they envisage the UK developing a central bank digital currency. The idea is that the retail CBDC would be a new form of digital money, denominated in sterling and issued by the Bank of England, which would sit alongside (rather than replace) cash and bank deposits.
So, when might we have digital Britcoins in our digital wallets? Before we get to that point, the UK authorities intend to pass through various phases of work, at each stage concluding that the case for a CBDC is made and could work in practice.
- First is the research and exploration phase. This is where the UK is currently. The Bank of England has already published a couple of discussion papers (here and here) and signed up to design principles for CBDC projects with other central banks. The next important milestone will be a consultation in 2022 on the case for launching a UK CBDC, which will also set out high-level design features.
- That consultation will then inform a decision on whether the UK moves to the next stage: the development phase. This would involve the Bank of England designing the technical specifications and testing the feasibility of the CBDC architecture.
- Next, there would be the build and testing phase. According to the Treasury, this is likely to take several years and involve large-scale prototypes and pilots.
- And, finally, launch… at some point in the second half of the decade (at the earliest).
Exploring and delivering a UK CBDC, if there were a decision to proceed, would require carefully sequenced phases of work, which will span several years.