BoE: Digital Pounds Likely to Be Managed Through Accounts

Bank of England (BoE) Deputy Governor Jon Cunliffe said Wednesday (July 6) during a panel discussion that any proposed digital pound would likely be managed through some sort of account rather than working like cash or banknotes, Bloomberg reported.

Cunliffe, who is overseeing the bank’s work on central bank digital currencies (CBDCs), said during the discussion that policymakers are weighing how to make the pound more effective to use in online transactions, according to the report, but fears about digital pounds being used in crimes and money-laundering operations require more thought about how to offer them.

“I think it’s very unlikely that any of us would issue a retail CBDC as a bearer instrument,” Cunliffe said, per the report. “It would probably be some form of account-based instrument.”

The BoE is one of many central banks considering how to launch a digital currency that’s safe and free from the threat of criminal activity. Cash is declining as a payment method across the United States and Europe, the report stated. The discussion has included talk about the role of central banks in issuing digital currencies and how they would compete with bitcoin and other cryptocurrencies.

“We will produce the asset and the rails, but the interface with the public would actually be done by private-sector payment providers,” Cunliffe said in the report.

The BoE plans to release a research paper at the end of the year about how a retail CBDC might look, according to the report. Cunliffe said Wednesday he expects it will be five or more years before digital pounds are available to consumers.

Last month, the BoE granted United Kingdom digital bank Kroo a full banking license. In order to obtain a license from the BoE, a bank must demonstrate that it has robust processes and systems; compliance and risk management capabilities; a viable business model; fit and proper directors/managers; and adequate financial resources.

Read more: UK Digital Bank Kroo Granted Banking License 

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