A research unit established by the Bank of England (BoE) is investigating the introduction of a cryptocurrency linked to pounds sterling.
The team involved expected to report back within the next 12 months, a Telegraph report says.
If approved, the central bank-issued cryptocurrency would allow British users to keep their digital money with the central bank itself, eliminating the need for retail banks. The system would also enable large transactions to be carried out almost instantaneously, the report says.
Talking to the Treasury Select Committee in England in December, BoE governor Dr Mark Carney said that he has participated in discussions with major central banks on launching digital currency, adding that BoE had carried out a successful test on 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.”
He further said that using blockchain technology for settlements between central banks would be the “most interesting application” that would benefit financial stability and efficiency.
As reported in September 2017, Simon Scorer, a researcher at BoE, has publicly discussed the design requirements for a central bank-issued digital currency, saying it would need “extraordinary levels of resilience” against a range of problems.
“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,” he said at the time.
Bank of England image via Shutterstock