According to a recent report by The Times, the Bank of England (BOE) has begun hiring employees to develop its digital currency. The central bank plans to put together a team of up to 30 individuals to work on its central bank digital currency (CBDC) project.
Bank of England Hiring for Digital Currency Project According To Report
The BOE’s website has advertised for two roles – a “digital pound solutions architect” and a “digital pound security architect,” both created in late March. The project is currently being referred to as the “digital sterling” or “digital pound,” but the media has nicknamed it “Britcoin.”
It has been reported that the BOE and the UK Treasury are investigating the feasibility of introducing an official digital currency by 2030, which would be issued by the BOE and backed by the government.
The BOE and the UK Treasury have said that it is too early to decide on whether to introduce a digital pound, but they see merit in conducting research and planning for it. Programmability has been identified as one of the primary advantages of digital currencies, and it is considered an innovative feature that a central bank digital currency could help enable.
The report stated that the European Central Bank (ECB) has rejected the idea of its regional CBDC being programmable money, which would have required the ECB to limit the places, times, or individuals that digital currency payments can be made to. As per Martin Hargreaves, the chief product officer at Quant, this decision may be beneficial as it can help to minimize the control that large corporations have over consumer payments.
The Bank of England has clarified that it is not fond of the term “Britcoin” and has stated that no decision has been taken on whether a digital pound would employ distributed ledger technology. The central bank has advertised for two roles on its website – a “Digital Pound Security Architect” and a “Digital Pound Solutions Architect” – with a maximum salary of £80,000 ($99,000).
CryptoUK board adviser Lan Taylor has commented on the bank’s decision to hire a team of up to 30 people, saying that it shows that the BOE is serious about the digital pound and its impact. If a CBDC is to be issued, it could likely exist along with the pound and won’t be used as a primary currency.
Bank Of England’s CBDC To Complement & Not Replace The Pound
The Bank of England and the United Kingdom’s Treasury are exploring the possibility of creating a digital currency that could be used in tandem with cash. The central bank digital currency (CBDC) will be the subject of a joint consultation paper set to be released on June 7th, in which feedback will be shared on the idea.
Finance Minister Jeremy Hunt suggested that a digital pound issued by the Bank of England could provide a trustworthy, accessible, and easy-to-use alternative to cash. At the same time, the aim of digital currency is to coexist with cash, rather than replace it.
The Bank of England and Treasury’s primary objective is to offer a government-backed alternative to privately issued stablecoins. With Big Tech companies expected to develop stablecoins in the coming years, officials from the BoE and Treasury believe a government-backed digital currency would provide a more reliable alternative.
BOE Governor Andrew Bailey stated that a digital pound would not only provide a new way to pay but would also help businesses, maintain trust in money, and better protect financial stability. If the proposal goes ahead, the digital pound and its underlying blockchain-based system will not be developed until at least 2025.
The Central Bank Digital Currency Taskforce, a collaboration between the BoE and the Treasury, was established in April 2021 by the current Prime Minister and former finance minister Rishi Sunak. The task force is responsible for overseeing the study and potential implementation of the digital pound.
Despite the need for a digital pound in an increasingly digital world, public opinion on CBDCs is generally negative. Concerns regarding financial privacy and personal freedom infringement are among the reasons for this. Nonetheless, the BoE believes that a digital pound is “likely to be needed” in the future, and its implementation could improve payment options for individuals.
The Treasury opened a public consultation on the digital pound in February, with the deadline set for June 7th. The proposal to develop a digital pound was also mentioned in the consultation, with respondents invited to provide their thoughts on the matter.
A digital pound allows for peer-to-peer electronic transfer without relying on banks or providers like Visa or Worldpay. Initially, there may be limits on the number of digital pounds that can be held, but the BoE and Treasury are actively seeking input from stakeholders.
Bank of England May Need to Lower Interest Rates Earlier Due to Economic Concerns
During a speech at the Royal Economic Society’s annual conference, Silvana Tenreyro, a member of the Bank of England’s monetary policy committee (MPC), expressed concern that the central bank may need to lower interest rates earlier and more rapidly due to the impact of previous increases that have dragged down the economy and hindered inflation.
Tenreyro pointed out that there are signs of inflation falling “well below” the bank’s 2% target rate as a result of a sharp drop in global energy prices. However, this is contrary to the views expressed by Huw Pill, who is also a member of the rate-setting committee, as he stated that the bank still needed to be vigilant about the risk of inflationary pressures persisting for longer than expected.
The Bank of England raised interest rates for the 11th consecutive time to 4.25% last month, and financial markets expect another quarter-point rate increase at the next MPC meeting in May. Tenreyro noted that global supply chain bottlenecks caused by the Covid pandemic and a surge in wholesale energy markets were starting to unwind, leading to a sharp decline in inflation.
She also warned that the drop had been faster than the bank had anticipated, and that previous rate increases would have an impact over the course of this year and next. She warned that if increases in bank funding costs “persist in a way that affects the inflation outlook,” then rate-setters may be forced to act.