Bank of England Joins Key Roundtable on Central Bank Digital Currency Design

The Bank of England will take part in a key meeting tomorrow to discuss central bank digital currencies (CBDCs) and their possible infrastructural designs. 

Hosted by global central banking think tank, the Official Monetary and Financial Institutions Forum (OMFIF), on Aug. 19, the roundtable will involve the BoE’s senior fintech specialist, Simon Scorer, alongside delegates from the Swiss National Bank, ING Nederland and the Hungarian National Bank (Magyar Nemzeti Bank). The CEO of enterprise-focused blockchain platform Cypherium, Sky Guo, will also join the discussion.

A key focus of the meeting will be to tackle the ways in which blockchain technology can benefit various models for CBDCs. This includes the use of smart contracts — e.g., as with designs for “programmable money” — and models for interoperable blockchain networks both within and beyond national borders.

Guo said that as long as CBDCs remain in their early phases of conception, “now is the time to debate the advantages and disadvantages of infrastructural ideas, especially related to how these instruments will interact and operate with each other.” 

Each central bank delegate — the BoE’s Simon Scorer, Magyar Nemzeti Bank’s chief digital officer Anko Szombati, ING’s blockchain team IT specialist Cees Van Wijk, and Swiss National Bank governing board member Thomas Moser — will present their institution’s findings from internal CBDC research. 

As the OMFIF notes, private sector pressure from the likes of Facebook has spurred an estimated 80% of the world’s central banks to look seriously into CBDC issuance and to assess the various infrastructural possibilities, including blockchain, for CBDC networks.

In March 2020, the BoE issued an in-depth discussion paper devoted to CBDCs, which analyzed the rapidly changing payments landscape and the potential role for CBDCs to support the bank’s task of managing monetary and financial stability. The paper included an appeal for comments on the BoE’s conceptual “platform” model for a potential CBDC. 

Shortly before he assumed the role of BoE governor this year, Andrew Bailey expressed his skepticism about private, decentralized cryptocurrencies such as Bitcoin (BTC), warning investors they had better be “prepared to lose” all their money if they choose to hold the asset.

Bailey has toed a positive line toward CBDCs, noting this July that the BoE will continue to look seriously at the question of whether or not to issue a digital currency, “as it does have huge implications on the nature of payments and society.”