New Green Paper outlines digital future for the British pound
11.02.2022 - 17:05
/ dailyrecord.co.uk
Project New Era, a ground-breaking initiative in the UK led by The Payments Association, paywith.glass and other private industry stakeholders, supported by Boston Consulting Group (BCG) as its consulting partner, has published its Green Paper report, ‘A New Era for Money’.
The paper advocates for a first of its kind collaboration between central banks, regulators, commercial banks and other financial institutions (FIs) towards the exploration of a retail Central Bank Digital Currency (CBDC) in the UK.
The Green Paper will be followed by real-world pilots to address open design questions and mitigate risks. The pilots will generate working data and feedback that central banks and policymakers can use to inform open design questions and enable relevant authorities to make policy decisions.
CBDCs have emerged in recent years in response to the decline in cash payments, the search for payment efficiencies and the emergence of private digital currencies, such as cryptocurrencies and stablecoins.
Most central banks are currently researching CBDCs with The Bahamas, Cambodia and Nigeria already launching full implementations. China is expanding its pilot of a ‘Digital Yuan’ to tens of millions of users and India has recently announced a Digital Rupee, expected by 2023.
The primary benefits of CBDCs include near-instant settlement, the potential for reduced transaction costs, enhanced security and programmable payments - a new breed of automated payment.
Secondary benefits like financial inclusion vary in materiality by country, while monetary policy implementation and countering the threat of stablecoins with a CBDC are yet to be established.
The report suggests there is potential for a CBDC to power an alternative, regulated