The Bank of England (BoE) and the Treasury have been convinced for some time that a central bank digital currency (CBDC) is becoming increasingly necessary. Governor of BoE, Andrew Bailey said in a report: “On the basis of our work to date, the Bank of England and HM Treasury judge that it is likely a digital pound will be needed in the future.” Chancellor, Jeremy Hunt said earlier this year: “While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that is trusted, accessible and easy to use. That is why we want to investigate what is possible first, whilst always making sure we protect financial stability.”
The BoE will significantly bolster its team developing a digital pound after a consultation on the project closes later this year. Tom Mutton, director of the BoE’s central bank digital currency operation said he wants to hire as many as 30 people as the bank moves into the design phase of a potential “Britcoin” in the second half of 2023.
“We are focused on the skills we need to add (rather than the numbers), but we are going to need a chunk of people,” Mutton said in an interview last month.
“It might be 10, it might be 20, it might be 30. But we need to get this right and we need to invest in it.” The BoE has not yet decided whether it will issue a CBDC and is consulting on how the new type of currency might work. Firms have until this month to respond. However, Sir Jon Cunliffe, the Bank’s deputy governor for financial stability, said earlier this year that the likelihood that there will be a Britcoin is greater than 50 per cent.
“We’ve moved on the probability spectrum from ‘it may not happen’ to ‘we think it is more likely than not’.” Mutton said the next stage of work on a potential CBDC would involve “working out what we want to build and then evaluating whether we can do it, how much it would cost and what the benefits are”.
Speaking at UK Finance, Cunliffe said the Bank could not ignore the possibility that the use of cash would become increasingly irrelevant while “new forms of money” would become more and more prominent, threatening trust in the monetary system.
There are currently between 20 and 30 people in the team, he added, meaning the headcount would potentially double in the coming years based on the hiring estimate. He added: “I am not sure whether a CBDC will be built on distributed ledger technology. I suspect it probably won’t, but we’re open-minded.
“But we definitely need some people who know about distributed ledger technology, we need cryptographers, we need people who specialise in security. Those are important skills for us to bring in.”
The Bank will also hire technology architects, developers and security experts. It has already placed two adverts online for junior manager-level roles in the team, a solution architect and a security architect. Salaries for the role were set at around £69,230 to £80,000 per annum. The adverts are now closed.
The number of people the BoE eventually hires will depend on how heavily it leans on private-sector partnerships. But Mutton said it is “really key that we also retain some of that capability in the bank”.
If the Bank eventually decides against issuing a full-scale consumer-focused digital pound, keeping expertise on board could still help the BoE to develop other products aimed at different user groups – for example, a CBDC only for institutions such as banks and corporates.
(The writer is our foreign correspondent based in the UK)
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