Officials say the Bank of England is ‘very unlikely’ to build a retail wallet for CBDC

The Bank of England is considering issuing a so-called CBDC and will present its case later this year.

The Bank of England, on the other hand, does not appear to be considering launching a consumer-facing wallet for such a currency.

The Bank of England’s 327-year-old institution is “very unlikely” to build a retail-facing wallet that could be used to store and spend digital currency, according to a top management.

The subject of whether the Bank of England will create a so-called Central Bank Digital Currency (CBDC) is still up in the air. Later this year, the Bank expects to release a consultation document outlining its appraisal of the advantages of what has been termed the “Bitcoin.”

While the issuing of CBDCs is still up in the air, the development of a companion wallet looks to have been ruled out.

Katie Fortune, a senior manager in the central bank’s CBDC unit, stated, “I believe it’s safe to say it’s quite improbable that the Bank would issue a retail wallet.” According to Fortune, the private sector is more likely to build wallets that may support a British digital currency.

However, this is not the case everywhere. In January, a beta version of e-CNY, China’s digital yuan mobile wallet, was released on the iOS and Android app stores. El Salvadoreans are urged to handle their bitcoin via the state-backed Chivo wallet, which was made legal tender in the country last year.

Questions on technical matters

Aside from wallets, most other technical questions about the Bank of England’s CBDC operation remain unanswered.

According to Fortune, it’s unclear whether any CBDC issued by the central bank would have to be backed by blockchain technology, a type of digital ledger that underpins most major cryptocurrencies.

“For us, that’s still a really open topic.” It’s not assumed that it’s constructed on a blockchain, and it’s also not assumed that it isn’t,” she said, adding that the Bank has been canvassing a wide range of perspectives through its CBDC forums, which include representatives from banks, fintech companies, and academia.

After publishing its consultation paper later this year, if the central bank decides to move through with a CBDC, it will enter a development phase that will include “drawing out some prototypes,” according to Fortune. She believes that a CBDC will not be established in the United Kingdom until at least 2025.

Coin repercussions
One factor the Bank of England is considering as it considers a CBDC launch is the impact such a currency may have on UK commercial banks.

In November 2020, Sir John Cunliffe, deputy governor of the Bank of England, stated that central banks are not responsible for protecting commercial banks from the impact of digital currencies. That was echoed by Fortune.

She stated, “Financial stability is [the Bank’s] obligation – it’s one of our mandates.” “However, retaining present business models isn’t one of them. So we care, but it doesn’t mean things have to stay the same.”

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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