The CBDC Taskforce has four primary functions which revolve around coordinating the exploration of the objectives, use cases, opportunities, and risks of a potential UK CBDC, guiding the evaluation of the design features and others.
The United Kingdom has announced the establishment of a Central Bank Digital Currency (CBDC) Taskforce to help lead the initiatives in its pursuit of a Digital Pound. According to the official announcement which came as a part of the April 2021 Fintech week, the UK CBDC Taskforce will be co-chaired by the Deputy Governor of the Bank of England, Jon Cunliffe, and HM Treasury’s Director General of Financial Services, Katharine Braddick.
Central Bank Digital Currencies are the next major financial innovation being explored by monetary authorities around the world. The advent of the coronavirus pandemic and its ensuing strain on the global financial ecosystem fueled the move by central banks to begin developing their e-money to serve as a complement to paper cash. The growing scare of privately issued virtual currencies such as Bitcoin (BTC), and stablecoins in monetary systems further necessitated the speedy response from global apex money managers.
Amongst the major economies pursuing a digital version of their fiat currency include China, Sweden, and Japan amongst others. The Central Bank of the Bahamas, however, made history as the first monetary authority to launch a fully functional CBDC dubbed The Sand Dollar.
While the UK is upfront about embracing a CBDC innovation, the announcement noted the creation of the Taskforce does not imply a decision to issue the Digital Pound has been made. The UK government recognizes that cash is important to its financial ecosystem, and any likely CBDC will exist to complement the fiat money.
“The Government and the Bank of England have not yet made a decision on whether to introduce a CBDC in the UK and will engage widely with stakeholders on the benefits, risks, and practicalities of doing so. A CBDC would be a new form of money that would exist alongside cash and bank deposits, rather than replacing them; the Government recognises that cash remains important to millions of people across the UK, and has committed to legislating to protect access to cash,” the announcement reads.
Specific Duties of the UK CBDC Taskforce
As detailed by the UK Government, the CBDC Taskforce has four primary functions which revolve around coordinating the exploration of the objectives, use cases, opportunities, and risks of a potential UK CBDC, guiding the evaluation of the design features a CBDC must display to achieve the country’s overall goals, supporting a rigorous, coherent and comprehensive assessment of the major case for a UK CBDC, and monitoring international CBDC developments to ensure the UK remains at the forefront of global innovation.
To carry out these functions in order to achieve its well-defined end goals, the CBDC Taskforce will limit its membership to “relevant individuals from the Bank of England and HM Treasury,” as the announcement stated. The Bank of England has also announced the creation of a CBDC Unit, a CBDC Engagement Forum as well as a CBDC Technology Forum. These formations will help interface with the relevant stakeholders regarding the proposed CBDC pursuits.