The UK Chancellor this week announced the launch of a CBDC task force, bringing together the Bank of England and Her Majesty’s Treasury to coordinate the exploration of a potential central bank digital currency.
Depending on the feedback received from various sectors of industry, academia and civil society, the task force will advise the Bank of England on the future rollout (or not) of what would be a digital version of the pound.
Antony Welfare, NEM’s executive director of business, is a member of the Whitechapel Think Tank and the Finance Payments Working Group, both of which have provided preliminary investigations to the Bank of England in the formation of its CBDC task force. Wellbeing contributed to a report entitled The impact of digital currencies on the future of payments, commissioned by the Bank of England, published December 2020.
The task force will look at the implementation of a CBDC from every possible angle, but in a conversation with Cointelegraph, Welfare said one of the biggest benefits a digital pound offers could be financial inclusion, citing the ubiquity of mobile devices and their mundane use among the population. :
“A CBDC can significantly help build financial inclusion. The vast majority of citizens today have access to mobile devices, the potential benefits of accessing state digital currency literally in the palm of the hand are incredible. “
Welfare noted that a digital system would have provided usefulness amid the COVID-19 block, particularly to help the government pay unemployment benefits to redundant citizens.
“In terms of a crisis, for example if the government wants to send stimulus payments, currency could be immediately issued to millions of citizens – as recently tested in China with the digital yuan,” Welfare added.
The 74-page report, published by Whitechapel Think Tank and Finance Payments Working Group, highlighted six key policy considerations relevant to the implementation of a CBDC in the UK. universal standards for security and privacy that will be enforced by the advent of new technology.
But as Welfare points out, the potential for misunderstanding will still exist among those in government, banking and beyond. He believes the education process should be part of the roadmap of a potential CBDC rollout.
“As roadmaps for the implementation of CBDC accelerate, there will be much misunderstanding by many stakeholders about the fundamentals of a CBDC, even today many governments and banks do not fully understand the benefits of a CBDC. part of every state’s CBDC roadmap, ”said Welfare.
The transparency that enables the use of blockchain technology is usually seen as a desirable benefit, but according to Welfare, this could be one of the bottlenecks preventing privacy-conscious entities from boarding a CBDC.
“The biggest challenge may lie in privacy concerns. Blockchain is inherently secure and offers excellent data protection, that is, it can be designed and managed in a way that may not provide as much privacy as citizens or businesses want, ”said Welfare.
China’s accelerated progress towards launching its own CBDC – the digital yuan – could also be a deciding factor in whether the UK is launching a digital pound, says Welfare, who warned that a ‘CBDC hole’ British pound could undermine the way it exists today. .
“In the long run, one of the biggest drivers for adopting a digital pound could lie in international trade,” Welfare said, adding, “Countries with CBDCs may be able to demand payment in their own CBDC, ie digital yuan., digital dollar, etc., which would be a politically sensitive negotiating issue and potentially undermine the value of the GBP. “