Ben Broadbent, deputy governor for monetary policy at the Bank of England (BoE), has stated that the institution is paying keen attention to roll out of a central bank digital currency (CBDC).
According to Broadbent, the rollout of a CBDC comes with benefits to the broad financial ecosystem for facilitating elements such as smooth payments, Bloomberg reported on February 27.
“The experience of digitalization so far is that new products and services enabled by new technologies can be adopted very rapidly at scale. <…> This obviously brings opportunities for financial institutions, for businesses, for individuals. We would expect to see continued improvements, reductions in friction and cost of payment,” he said.
In this line, Broadbent stated that the institution is exploring regulations of payment technology systems such as CBDCs.
It is worth noting that the sentiments by the official come after the regulator and the British Treasury announced that the institutions were exploring the viability of a CBDC. If the plan is realized, the CBDC will be dubbed ‘Britcoin.’
CBDC consultation paper
Already, both agencies unveiled a formal consultation to create the pathway for the rollout of a CDBC that could operate alongside the region’s fiat currency.
“At this stage, we judge it likely that the digital pound will be needed in the future. It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified,” the consultation paper said.
Interestingly, Britain’s Prime Minister Rishi Sunak challenged the BoE to explore CBDCs back in 2021 when he served as the finance minister. At the same time, in October last year, Britain’s financial services minister Andrew Griffith noted that the region could not avoid the issue of CBDC at a time other global regulatory banking institutions are advancing their research into the digital currency.
Furthermore, the Bank of International Settlements (BIS) has pointed out that CBDCs are essential in modernizing finance. As reported by Finbold, BIS head, Agustín Carstens, suggested that cryptocurrencies ‘don’t make for trusted money’.
Overall, different entities consider CBDCs as an alternative to curb the influence of private digital currencies such as Bitcoin (BTC). Previously, BoE) deputy governor Sir Jon Cunliffe had warned that the growth of cryptocurrencies could threaten the financial system.