Sir Jon Cunliffe Announces the Digital Pound
Sir Jon Cunliffe, Deputy Governor, Financial Stability at the Bank of England recent speech at Finance UK, set out the future purpose of a digital pound, a new, digital form of money, issued by the Bank of England for use by households and businesses for everyday payments backed by the Bank of England and the future for the digital payments landscape. In the view of the Bank the creation of the digital pound will not be implemented quickly, indeed “a digital pound would be a very substantial financial infrastructure project that would take several years to complete”, with the Bank choosing to work with “private sector partners on proofs of concept, experimentation as well as on the development of the blueprint itself”.
Importance was placed by Sir Jon to separate the cryptoasset environment from the digital pound, a comment which one assumes was aimed at both crypto enthusiasts suspicious of Central Bank meddling in the crypto sphere and ordinary consumers unfamiliar with the technology and language of distributed ledger technology. Sir Jon went further, to sell the digital pound as a safer option for consumers, away from the speculative nature of volatile crypto assets, saying of crypto assets that “they have no intrinsic value” and therefore can not be used for general payment purposes. Many of the individuals invested in the estimated $804 billion crypto currency market may choose to differ in that opinion.
Instead Sir Jon emphasised the social nature of money and the importance of trust in exchange and the growing importance of digital forms of money against the ongoing decline in physical ‘cash’ usage. For Sir Jon, the importance of the Bank providing an open digital money platform would provide a necessary trusted source for developers to build new products and new technologies offering new functionalities to complement existing financial inclusion initiatives.
To support this effort, Sir Jon announced that the Bank set out that model in detail for consultation within the industry and for the public to join the consultation and to provide feedback. The Bank, Sir Jon said “would provide the digital pound and the central infrastructure, including the ‘core ledger’ with private sector firms “providing the interface between the Bank’s central infrastructure and users by offering wallets and payment services”. These private companies would be able to integrate the digital pound, as the settlement asset, into the services they would offer to wallet holders. This is an interesting concept that essentially replicates existing technology with one backed by the stability offered by the Bank of England, however the launch dates puts the concept into an all too distant future.
You can read more of Sir Jon’s insights here: https://www.bankofengland.co.uk/speech/2023/february/jon-cunliffe-speech-at-uk-finance-update-on-central-bank-digital-currency?utm_source=Bank+of+England+updates&utm_campaign=8efc0a0ae5-EMAIL_CAMPAIGN_2023_02_07_03_51&utm_medium=email&utm_term=0_-8efc0a0ae5-%5BLIST_EMAIL_ID%5D
