The crypto industry has become familiar not only to traders and investors but to state authorities. The launch of the Central Bank Digital Currency (CBDC) and its possible advantages are under the Bank of England’s study of 2022. Contrary to popular belief, the UK’s Central Bank considers this currency to be non-suitable for launching retail-facing wallets.
According to the senior manager in the BOE’s CBDC unit, Katie Fortune, the Bank of England does not plan to develop a wallet for retail. Presumably, it would not be used for storing and using digital currency. For now, it leaves the audience without a final decision on the release of CBDC. The crucial step the Bank of England plans to take to resolve the issue of cryptocurrencies is to publish a document describing the benefits and risks while they exclude the launch of the wallet.
The senior manager claims that the possible solution to this situation is the creation of wallets that could support the British digital currency. However, they are not likely to be officially issued at the state level; the private sector may produce the wallet.
In contrast to that statement, there is an example of a digital wallet e-CNY in Chinese yuan and a mobile application that were developed and released for Android and iOS in January 2022. In turn, El Salvador’s population already uses a Bitcoin wallet that has found support from the authorities and allows citizens to legally manage bitcoins on their accounts.
Not only wallets but also the basics of the system remain under discussion. According to the information shared by a senior manager, so far, there is only an assumption about whether the CBDC implemented by the Central Bank will be based on blockchain technology. The use of a decentralized database and a way to encrypt and transfer data that is actively used worldwide to transfer cryptocurrencies is also questionable.
It cannot be said that the Bank of England is not taking action to support the initiative. According to the manager, the BOE collects a database of opinions on its forums and internal resources among members of the companies’ bank representatives and scientists, who specialize in the development of digital currencies and cryptocurrencies. After the release of the consultation document, the bank may start developing prototypes by the end of this year, but a launch of CBDC in the UK before 2025 should not be expected.
The Bank of England persists in thrilling the minds of developers and managers alike with questions about what could be the result and influence of a new currency on commercial banks across the UK.
Katie Fortune repeated the remark that John Cunliffe, the deputy governor of the Bank of England, made in November 2020. It stood with the idea that central banks are not obliged to defend commercial banks from the influence of digital currency. The preservation of the current business models is not the case when the bank is obliged to strictly follow the past foundations so that changes are introduced and controlled, but the systems of non-governmental organizations may be forced to make attempts to adapt.