CBDC Timeline Extended
Bank of England (BoE) postponed. They will not make a decision about a central bank digital currency (CBDC) for at least two years. That complicates the details of the project’s timing. In 2021, Rishi Sunak was the one to pitch the digital currency. He was finance minister at the time. The reluctance is greater on the part of the BoE and current government. Privacy issues were raised during public consultation.
Governor’s Reservations and Design Phase
Governor Andrew Bailey had raised doubts in October. He said he did not prefer a CBDC. It could become something that is necessary, he said. This would be if banks would not improve payment systems. These systems would also have to compete against tech companies that are less regulated. The BoE begins, working with the finance ministry. They’ll target a possible design for a digital currency. This is in line with the Bank of England’s plans for previous consultations.
Assessment and Looking Ahead
The design phase is expected to take the central bank about two years. They will also take stock of changes in the payments landscape. The policy case will then be assessed by the Bank and government. They will decide on a digital pound. In January 2024, the BoE said a decision wouldn’t come until 2025 at the earliest, regarding the Bank of England’s digital currency.
Privacy and Transaction Tracking
The British government considered privacy. A digital pound would be private but not anonymous. This is different from physical cash. Suspicious transactions can be traced by authorities. This is including money laundering and terrorism financing. This is the same as traditional bank accounts and credit card payments. The BoE said legislation would help protect user privacy. Neither the Bank nor the government can view any personal information. Nor can they dictate how people spend their money. This is the assurance given by the Bank of England regarding privacy and tracking concerns.
