Bank of England (BoE) has established a research unit that is designed to investigate the introduction of a cryptocurrency linked to pounds sterling. The team is expected to bring back a report within the next 12 months, according to The Telegraph.
If the project is approved, the central bank would issue a cryptocurrency which gives British citizens the opportunity to keep their digital money with the central bank itself, rather than relying on retail banks. Additionally, this cryptocurrency would allow large volume transactions to be performed almost instantaneously.
Bank of England governor, Mark Carney, spoke with the Treasury Select Committee in December and revealed that he had participated in discussions with major central banks on launching a digital currency. He also added that the central bank successfully carried out tests on the Blockchain technology last summer.
“The underlying technology [blockchain] is actually of a fair bit of interest. We are working with it at the Bank of England.”
Mike further added that the Blockchain technology could be used for settlements between central banks and that this application would be “the most interesting”, improving both financial stability and efficiency.
In September 2017, Simon Scorer, a researcher at Bank of England, publicly discussed the design requirements for a central bank-issued digital currency, arguing that extraordinary levels of resilience would be needed to face all the potential problems with such an asset. He said at the time:
“Like current financial infrastructure, a widely used [central bank digital currency] would likely be considered critical national infrastructure. … It would need to be operational across the country, 24 hours a day, 365 days a year.”