The Bank of England (BoE) is taking a proactive stance related to cryptocurrency, money, and payments. In a recently released discussion paper, the central bank outlined its plans to conduct a series of experiments with distributed ledger technology (DLT) and wholesale central bank digital currencies (wCBDCs).
Bank of England’s CBDC experiment
Governor Andrew Bailey emphasized the critical role of confidence in money and payments for the Bank’s responsibility towards monetary and financial stability.
“As innovation in this space continues, our role must also evolve, to support a robust and dynamic U.K. economy,” Bailey stated, underscoring the BoE’s adaptive approach.
The Bank’s experimental program will focus on exploring how central bank money can interact with DLT platforms through synchronization and wCBDCs.
Synchronization involves transferring assets between platforms while settling the cash component on the Bank’s Real Time Gross Settlement system.
Importantly, the central bank plans to collaborate with HM Treasury, the Payments Systems Regulator, and the Financial Conduct Authority to ensure the “singleness of money” is maintained.
Additionally, the bank mentioned that they will conduct several experiments to make sure that the singleness of money is sustained between tokenized deposits and stablecoins.
The bank stated that they have carried out work to explore a retail CBDC. However, the bank also stated that it remains committed to continuing to provide cash for all those who want to use it.
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