Yesterday John Glen, the economic secretary to the Treasury, made a statement on the progress made regarding the development of a UK central bank digital currency (CBDC) by a joint HM Treasury and Bank of England taskforce set up in April for the purpose.
No decisions have yet been made, but the sequence leading to the launch of any CBDC would be as follows:
- a consultation to be published next year, setting out the the taskforce's assessment of the case for a UK CBDC;
- a decision to proceed with a CBDC project to be made after consultation (timing not finalised);
- a development phase, involving in-depth testing of the design for, and feasibility of, a UK CBDC; during this phase the Bank of England would publish a technical specification of the proposed conceptual architecture;
- a decision taken to proceed with building and testing - likely to take several years; and
- a subsequent launch.
The commencement of each of these stages would require successful completion of the preceding stage and a positive decision to proceed being made, meaning despite the efforts expended to date there is no certainty that there will ever be a UK CBDC. Even if a UK CBDC were launched, given the timings involved, this would not be expected to happen until "the second half of the decade".
The UK is by no means alone in exploring the possibility of issuing a CBDC. Indeed, the G7 central banks and finance ministries have developed a set of public policy principles for CBDCs. However, it appears there will be no rush to market for a UK CBDC and it will be interesting to see whether the UK's exploration project is soon overtaken (or indeed lapped) by other countries that have pressed ahead. That said, we do at least now have a clearer path to follow and can probably look forward to reading something slightly more substantive in 2022.