The Bank of England on its website said it was considering central bank digital currency (CBDC) because it said the way people are choosing to pay for things is changing.
The central bank of the United Kingdom said people were using cash less and financial technology (fintech) firms have started to offer new forms of money and new ways to pay. The Bank posted a statement last week that these changes mean new opportunities and risks that the central bank needs to plan for.
Central bank digital currency (CBDC) is money that a central bank, like the Bank of England, can produce. It's called digital (or electronic) because it isn't physical money like notes and coins. It is in the form of an amount on a computer or similar device.
The central bank said it was looking closely at whether central bank digital currency in the UK should be introduced and how it might work if it is introduced. It said BoE has not made a decision to introduce one, so it hasn't got a name, but a CBDC is not a cryptocurrency like bitcoin.
The Bank of England is speaking to businesses and communities to find out what impact a CBDC would have on them. On the website, the central bank said it was also working with international partners and organisations. It said it was, for example, working with the Bank for International Settlements. And we are working with finance ministries and central banks in other countries.
Looking forward, the Bank said that it has always looked for new ways to improve money and payment services. For example, it has used polymer notes because these are harder to counterfeit than paper ones and they last longer.
The central bank also said it is using the latest technology to rebuild the payment infrastructure that we offer to banks and other institutions.
( With inputs from ANI )
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