The move to create a U.K. central bank digital currency got a big boost on Monday when the two bodies said digital pound testing must go forward.
A digital pound is "likely to be needed in the future" according to a joint report by the U.K.'s Treasury and the Bank of England.
CBDC designs are generally built on either blockchain or the digital ledger technology (DLT) that blockchains are built on. One of the prime arguments used to support CBDCs is to fend off the use of privately issued stablecoins.
The Treasury and BoE said they will unveil a roadmap towards launching a digital pound on Tuesday, with the approval decision not coming before 2025. A formal public consultation will be launched today.
The BoE began investigating a CBDC at the behest of Prime Minister Rishi Sunak in 2021, when he was Chancellor.
In October, Economic Secretary to the Treasury Andrew Griffith said that a long delay in issuing a digital pound could hurt the economy.
"A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability," said Andrew Bailey, Governor of the BoE, on Monday. He added:
"As the world around us and the way we pay for things becomes more digitalized, the case for a digital pound in the future continues to grow."
Both he and Chancellor Jeremy Hunt emphasized that security and financial stability would be key factors in the decision.
A Wider Debate
The ruling will put the U.K. in step with the EU, where the European Central Bank has come out as a strong supporter of a digital euro.
The two largest existing CBDCs are China's digital yuan, and Nigeria's e-naira. Both have been struggling with uptake, with China continuing to delay the digital yuan's formal launch and Nigeria's central bank governor accusing retail banks of stymying the initiative.