🌎 UK Launches Digital Pound Labs for CBDC Testing

UK Takes Steps Towards Central Bank Digital Currency with Digital Pound Labs

The Bank of England is set to launch the Digital Pound Labs, a sandbox to test a potential central bank digital currency or government-issued digital pound. This initiative, announced in a progress report published on January 14, aims to foster partnerships between government authorities and private financial industry players.

Identifying Problems in Existing Payment Ecosystems

The BoE emphasized the importance of engaging both local and international participants to identify problems in existing payment ecosystems that a digital pound or CBDC could help address. By doing so, the bank hopes to create a more efficient and effective payment system.

The Role of Digital Pound Labs

The Digital Pound Labs will take a more hands-on approach, working alongside the Academic Advisory Group and the Engagement Forum as part of the bank’s consultation structure. This initiative will replace the Technology Forum, which previously served as a feedback channel for public and institutional input.

No Decision on UK CBDC Yet

Despite the launch of the Digital Pound Labs, authorities have not concluded on advancing a CBDC program. The BoE and HM Treasury plan to develop a more detailed policy and technology framework based on the consultation achieved during the design phase, which could take years. A digital pound would also require the U.K. Parliament’s stamp of approval, followed by more public consultation before the introduction of primary legislation.

“After completing the design phase over the next couple of years, including taking account of developments in the wider payments landscape, the Bank and Government will assess the policy case for a digital pound and determine whether or not to proceed.”