After a month of government discussions on monetary policy review, the Bank of England released a 57-page report. The report analyses the capabilities of the Central Bank Digital Currency (CBDC), which will save cost and provide daily payments as a regular form of money.
Traditional government-issued money is losing its position as the most competitive product for storing and transferring money around the world. The procedures, which are considered traditional, face growing competition from fintech companies, cryptocurrencies and blockchain-based platforms, as they offer mobile digital services that provide instant transactions, low fees and cross-border transfers.
The report says that CBDC will allow banks to use new technologies, while maintaining control over the money supply and working in parallel with cash and commercial bank deposits. CBDC is sometimes considered the equivalent of a digital banknote, although in practice it may have other functions.
Although the Bank of England has not made a formal decision to launch CBDC, the central bankers say that such a currency would be denominated in pounds sterling.
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