The Bank of England digital currency won't be launching any time soon
The Bank of England digital currency won't be launching any time soon

The British Central Bank is pushing research into a central bank digital currency, or CBDC. And a step into the consultation phase planned for next year. But even if he decides to continue using the proposed digital currency, Bitcoin, it will not appear until 2025. Before that, this was only possible if it was very strong from an operational and technical point of view.

Ann Boden, chief executive of Starling Digital Bank in London, said the main unanswered question is the problem Bitcoin is trying to solve. Borden is one of several industry executives advising UK officials on research into central bank digital currencies.

Recently, the growing interest in Bitcoin and other cryptocurrencies has revived the central bank's ambition to develop its own digital currency. So far, however, most CBDC projects are progressing slowly. Sweden, which is in the early stages of CBDC testing, hopes to have a digital version of the crown by 2026.

Meanwhile, the People's Bank of China is leading the CBDC project forward and launching a virtual version of the renminbi on a trial basis in several provinces. Experts said the People's Bank of China may be the first to launch a full-fledged central bank digital currency.

However, the digital renminbi of the People's Bank of China poses many problems, which makes it less attractive in Western countries. Critics say it is too focused and can be used to bolster government oversight. Because unlike cash, people's digital transactions can be tracked online.

Central bank digital currency is becoming a reality in China

The central bank discussion of cryptocurrency mimics the hype surrounding blockchain technology in late 2017, when the price of bitcoin hit record lows before plummeting sharply, said Garrick Hellman, director of research at crypto firm Blockchain.com.

Several large banks have mentioned the huge potential of blockchain technology. But they ignored the idea that Bitcoin and other digital currencies had become a mainstream financial phenomenon.

“I think central bank digital currencies are in danger of being overvalued and underserved,” Hermann said.

The development of a central bank digital currency poses many problems that need to be resolved, especially to ensure confidentiality and avoid financial oversight.

Bankers also fear that a central bank digital currency could weaken its role in the financial system. This can increase the liquidity risk of the bank. Consumers can also stream to the central bank instead of depositing money in the bank.

Whatever Bitcoin and other central bank digital currencies inevitably look like, there is no doubt that the transition to cryptocurrency is underway.

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