A few years back, no one might have even heard about Bitcoin or the word cryptocurrency. It all came forward as a viable and alternative mode of finance in 2009 when Bitcoin made its debut. After that, many cryptocurrencies and tokens were introduced, blockchain technology on which the financial records of the transactions for cryptocurrencies took place evolved, and more people eccentrically got around the idea of decentralization.
It is a concept that has motivated and put confidence in many. Now we have non-fungible tokens, Bitcoin futures exchange-traded funds, and CBDCs, which are the digital counterparts of a dedicated fiat currency. The Bank of England is fairly optimistic that CBDCs will prove to be a digital revolution for a modern world of finance. According to an estimate, about 20% of the retail deposits could be moved towards CBDCs.
UK is Working on CBDC
The governor of Bank of England, Andrew Bailey, and the deputy governor of financial stability, Sir John Cunliffe, gave answers to multiple questions asked by members of the Economic Affairs Committee. One of the questions was pointed towards the future of CBDCs and how relevant these might become. To this, Sir Cunliffe said that it is fairly an objective situation; some people might support it more than the others, while some might not be too comfortable going forward with this. It is very hard to predict how investors and innovators will be using their money in the future.
But it is evident that digital money is being used by people in an official capacity, and that means a digital revolution is afoot. The need to develop proper technology which would allow the development of digital currencies should be entertained as it is becoming a more relevant topic. The Bank of England is working with multiple options for developing the digital Pound CBDC for the sake of retail payments.
The role of the potential digital Pound is also being investigated in terms of payrolls and pensions. Sir Cunliffe also made the argument that digital payments have become more apparent within the United Kingdom; people feel safer transacting money directly from their accounts or mobile apps, so why not enable the same thing but with a decentralized twist that is the provision of digital Pound as a CBDC.