The Bank of England announced on Friday that it has reached an agreement with the Massachusetts Institute of Technology Media Lab Digital Currency Initiative, or DCI, for a joint twelve-month research project on Central Bank Digital Currency, or CBDC. The bank said in a statement that the new project is for research purposes only and is not intended to develop an operational CBDC.
The bank began looking into CBDC in 2020 by issuing a discussion paper in March of that year, to which DCI responded with a discussion on how CBDC could achieve the goals outlined in the paper. The bank and the finance ministry led an exploratory group on the matter last April. The bank’s latest CBDC discussion paper was released on Thursday.
Other voices have also entered the debate, such as the House of Lords Economic Affairs Committee expressing mixed feelings about the potential digital pound earlier this year, pointing to “the benefits of speed of settlement and cheaper and faster cross-border payments,” as well as “financial issues.” stability and privacy protection”.
The Bank of England joins the Federal Reserve Bank of Boston and the Bank of Canada as CBDC research partners at DCI, which is the originator of the OpenCBDC project. Last week, the Bank of Canada announced its year-long joint research, and the Boston Fed began collaborating with DCI in 2020.
However, MIT is far from alone in this area. About 60 countries are currently studying CBDC, and there are about 15 pilot projects currently underway, including China’s own digital yuan. Australia, Malaysia, Singapore and South Africa participated in the Dunbar project of the Bank for International Settlements. Nigeria and the Bahamas have already launched their CBDCs and Jamaica is expected to do so this quarter. Nigerian eNaira was developed by private fintech company Bitt.