Bank of England Will Not Develop a Digital Pound Based Digital Yuan’s Model

Bank of England Deputy Governor John Cunliffe has said the digital pound is likely to operate as a “merchant-grade” instrument based on a bank account, rather than as a currency for retail users.

Cunliffe, who is charged with overseeing the central bank’s British digital currency project (CBDC), has said policymakers are looking at ways to make the digital pound “more appropriate for consumers to make online transactions.” According to him:

“I think it’s unlikely that any of us would issue a retail CBDC in the form of a bearer document. It would probably be some form of bank account-based instrument.”

Francisco Uría, global head of banking and capital markets at KPMG, said in December last year that central banks have no choice but to respond to the threat posed by private cryptocurrencies by issuing CBDCs. He singled out the failure to manage financial stability and the loss of sovereignty as threats.

Uría also pointed to a number of disturbing aspects, among them the large space for cyberattacks, as well as the impact on retail banking and payment services.