The UK searches for head of CBDC, edges closer to a digital Pound Sterling

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  • The Bank of England is working with His Majesty’s Treasury to explore the feasibility of a CBDC
  • A recent post on LinkedIn revealed that the UK’s economic and finance ministry, His majesty’s Treasury, is looking for a Head of Central Bank Digital Currency
  • Despite the lukewarm reception to CBDCs thus far, there are still prospects for CBDCs

A recent post on the social media site LinkedIn revealed that the UK’s economic and finance ministry, His majesty’s Treasury, is looking for a Head of Central Bank Digital Currency. This is a bump in the arms of the UK’s cryptocurrency enthusiasts as the step represents a positive move towards web3 technologies.

The CBDC race

The race to launch CBDCs has certainly heated over the last 12 months. Despite the lukewarm reception to CBDCs thus far, there are still prospects for CBDCs to find their feet and get running once launched in an economy with a conducive environment. The UK is undoubtedly one of these economies. With inclusive and comprehensive internet infrastructure, an economy that is naturally going cashless and one of the more desirable currencies in the world. According to data released by the Bank Of England, fewer than 15% of payments in the UK were made using cash.

Africa has already seen the launch of the eNaira CBDC in Nigeria. However, despite being the most widely used CBDC of the five that have launched thus far, the eNaira is floundering. A low adoption rate contrasting with a very high adoption rate for other cryptocurrencies has plagued Africa’s first CBDC. Meanwhile, South Africa, which is friendlier to cryptocurrency in general, indicated they would play the role of CBDC fast followers.

The LinkedIn post does not disclose much about the job role. However, it is known that the Bank of England is working with His Majesty’s Treasury to explore the feasibility of a CBDC. To that end, they have created a CBDC task force. Observers and cryptocurrency enthusiasts believe that searching for a head of CBDC is one step forward in the plan to roll out a CBDC.

Is a CBDC the answer

CBDC is a hot topic. It gives governments and authorities a way to get in on the new technologies that web 3 offers, such as blockchain. And while the CBDC is a hot issue, we are unsure if it is the answer. It’s a different ball game in the UK compared to other places we have seen CBDC launch so far. Financial inclusion (defined by banking access) is at 97%. The UK is not chasing the same goals as Nigeria or El Salvador.

El Salvador more than doubled its financial inclusion by adopting an existing cryptocurrency, Bitcoin. In the process, they became the first country in the world to adopt Bitcoin as a legal tender and reserve currency. Other potential benefits of CBDC are still on the table to explore. These include fighting money laundering, improving digital payments and harnessing the power of blockchain for monetary policy.

The European Central Bank is also hard at work on the “Digital Euro” Central Bank Digital Currency, and they have targeted improvement in payments as the top priority for their entry. The United States of America is at work on the feasibility of a digital dollar. CBDCs does come with the risk of centralization. One of the most prominent features of cryptocurrency is decentralization. The lack of central authority controls digital assets. The lack of regulation to go with this decentralization has led to many shocking twists and turns in cryptocurrency. While Bitcoin, Ether and other significant cryptocurrencies stand shaken, blockchain collapses such as Terra and the FTX saga are reminders of how things can go wrong.

UK is crypto-friendly

One factor in CBDC reception could be the treatment of other digital currencies. Something that the Bank of Nigeria learnt the hard way with the launch of the eNaira. The country had a hard-line stance on cryptocurrency, and one of the retorts against the eNaira was that crypto had been banned in the country. If all digital currency is bad enough to ban, what makes a CBDC an excellent digital currency?

Thankfully the UK has taken an inclusive stance on cryptocurrency. The UK currently has registration requirements for businesses that allow people to buy or sell cryptocurrency through their platforms. The UK also has tax legislation for capital gains on cryptocurrency ownership and the proceeds of businesses that facilitate cryptocurrency trading. Know Your Customer and Anti-Money -Laundering requirements are also placed on those dealing in digital currency.

A lot to learn in CBDCs

The Frontrunners in the CBDC space have brought more lessons on what not to do than what to do. Thus far. In a country with high financial inclusion, CBDCs will have to prove to be a lot more than a take on the latest technology. The UK is already a digitally driven cash-light society for the right reasons. These are two of the major selling points of digital currencies in general and CBDCs in particular. So with those two reasons off the table, how will a CBDC fair?

The remaining benefits seem to be more to the issuer’s advantage, in this case, the Bank of England, than the end user. This is a problem that many African countries will have to deal with in the introduction of CBDCs. Africa’s answer to financial inclusion has been Mobile Money. Mobile money had taken root in countries such as Kenya, Nigeria, Egypt and Zimbabwe before the Covid-19 pandemic. Mobile operates on the most basic mobile phones.

Cryptocurrency and CBDCs are at a disadvantage to mobile money because of this ease of use. Mobile money makes it very easy for a person with a mobile phone to be financially included. It uses existing “infrastructure” such as your mobile phone number and existing SIM card. Being the latest technology is not enough for consumers to hop on to a way of doing things.

The bustle around Central Bank Digital Currencies is palpable. More influential economies are, at the very least, increasing conversation around CBDCs. Time will tell how well CBDCs will roll out and if they will be the next step or the next misstep.


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Kudzai G Changunda
Kudzai G Changunda
Finance guy with a considerable interest in the adoption of web 3.0 technologies in the financial landscape. Both technology and regulation focused but, of course, people first.