The Bank of England (BOE) is ramping up its plans to establish a team of up to 30 individuals to oversee the development of its central bank digital currency (CBDC) project. This announcement comes as the financial institution posted job vacancies in its career section for a “digital pound solutions architect” and “digital pound security architect” last March.
The new CBDC, also known as the “digital sterling” or “digital pound,” will be backed by the government and issued by the BOE. The recent developments follow the recruitment drive of the BOE and UK Treasury for a CBDC head to lead the said project last January.
Preparatory Work Is Justified
According to CryptoUK adviser Ian Taylor, the creation of a team dedicated to the digital pound shows the impact the CBDC will have and indicates the seriousness of the bank in its implementation. The BOE and UK Treasury stated in their consultation paper that the digital pound will likely be a necessity in the future. However, they have yet to strategize ways to introduce it. The two entities believe that much preparatory work is warranted at this stage.
Programmability in Digital Currencies
One of the significant draws of digital currencies is their programmability. Digital currencies can enable innovative services that CBDCs can facilitate.
The European Central Bank (ECB) already ruled out the possibility of the regional CBDC becoming programmable money, which would limit where, when, or to whom digital currency payments are made. Meanwhile, Quant Chief Product Officer Martin Hargreaves supports this move, citing the impact of money movement restrictions on CBDC adoption and usage.
Bringing Programmability to the Digital Pound
Hargreaves believes that there are ways to bring the benefits of programmability to the digital pound. For instance, the U.K. can use digital currencies to limit the power that major card networks, Big Tech firms, payment networks, and acquirers have over how, when, and to whom consumer payments are made.
Final Thoughts
The job vacancies for the CBDC or digital pound team highlight the seriousness of the Bank of England in pushing the project. It remains to be seen whether the digital pound will become programmable money or not, but experts believe that there are ways to bring the benefits of programmability to the currency.
If the wheels successfully come in motion, and depending on how it will be implemented, among the foreseen key benefits of CBDC adoption of financial institutions in the UK are the following:
- Increased Financial Inclusion: CBDCs have the potential to increase financial inclusion by providing access to digital payments to those who are unbanked or underbanked.
- Improved Payment System Efficiency: CBDCs can greatly improve payment system efficiency by reducing transaction processing times and costs.
- Enhanced Monetary Policy Transmission: CBDCs can improve the effectiveness of monetary policy by enabling central banks to directly distribute funds to consumers and businesses.
- Increased Security: CBDCs can offer enhanced security features compared to traditional payment systems, such as advanced encryption and tamper-proof transactions.
- Greater Control and Oversight: CBDCs provide central banks with greater control and oversight over the payments system, reducing the risk of money laundering and other illicit activities.
- Programmability: CBDCs can be programmed to execute financial tasks automatically, enhancing financial control and reducing the need for manual intervention.
- Innovation: CBDCs have the potential to enable innovative financial services and business models, such as micropayments and machine-to-machine transactions.