Central bank digital currencies: a solution in search of a problem? Contents

Chapter 5: Conclusion

126.We have yet to hear a convincing case for why the UK needs a retail CBDC. While a CBDC may provide some advantages on speed of settlement and cheaper and faster cross-border payments, it would present significant challenges for financial stability and the protection of privacy. Furthermore, a lot of work remains to find workable solutions which do not entail difficult design trade-offs which may make a CBDC unattractive. Earlier in this report, we put several questions to the Joint Taskforce which need to be answered. Crucially, it should set out the most significant long-term problem (or problems) to which it believes a CBDC may be the answer; and its assessment should compare CBDCs against alternative means of achieving the same aims. There are several other questions that should also be answered before deciding on whether to issue a CBDC:

127.While there appear to be no significant advantages for the UK in being an early adopter of CBDCs, we recognise that consumer payment preferences, technological developments and the choices of other countries may enhance the case for a UK CBDC in the future. The long lead times involved in scoping and developing a CBDC mean the Joint Taskforce should continue to assess the rationale and technology in preparation for such a measure possibly being needed in future. The Government and the Bank of England should continue to work with international partners on principles and standards while learning lessons on technical design and usage from the experiences of countries that introduce a CDBC soon.

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