Bank of England and HM Treasury Create Taskforce for Proposed CBDC Project

The Bank of England (BoE) and Her Majesty’s Treasury (HM Treasury) have jointly created a task force for the UK’s proposed central bank digital currency (CBDC) project.

Taskforce to Explore Modalities for UK’s CBDC

In a press release published on Monday (April 19, 2021), the BoE and the HM Treasury instituted a Taskforce that would be in charge of research the potential of a UK CBDC. While both financial institutions have not decided whether the UK would get its own CBDC, they plan to work with stakeholders to explore the use, risks, and benefits of a sovereign digital currency. 

Jon Cunliffe, Deputy Governor for Financial Stability at the BoE, and Katharine Braddick, Director General of Financial Services at the HM Treasury, would jointly head the Taskforce. Other necessary UK authorities would also be involved in the UK CBDC Taskforce.

The BoE stated that the proposed CBDC would exist alongside cash and banknotes, rather than act as a replacement.

The Taskforce would ensure coordination between the BoE and the HM Treasury regarding the CBDC project. It would also monitor CBDC developments in other countries, “to ensure the remains at the forefront of global innovation.”, among other duties. 

According to Reuters, the Chancellor of the Exchequer, which is the equivalent of the Finance Minister in other countries, Rishi Sunak, also announced the joint Taskforce at a financial industry conference. Sunak called on the BoE to consider creating a CBDC, in order to tackle “some of the challenges posed by cryptocurrencies such as bitcoin.”

Bank of England to Create New Division for CBDC Project

In addition to the Taskforce, the BoE also created a CBDC engagement forum and a CBDC technology forum. While the engagement forum would research on the practical challenges surrounding the development of a CBDC, such as implementation, design, and creation, the technology forum would explore the technological challenges. 

Also, the BoE is looking to create a new division of the central bank called the CBDC unit. Jon Cunliffe would head the new division, which would be in charge of internal and external exploration of the potential CBDC project. 

The BoE talked about of the possibility of creating a UK CBDC back in July 2020. According to the BoE’s governor Andrew Bailey, while the central bank was considering issuing a sovereign digital currency, Bailey indicated that such a project would not happen any time soon.

Prior to Bailey’s comment, a BoE executive Sarah John asked the government to consider creating a CBDC. John argued that a CBDC would best counter the threat by private digital currencies. In March 2020, the BoE published a research paper, detailing its plans for a CBDC.