The Bank of England recently announced that it is forming a partnership with the Digital Currency Initiative at the Massachusetts Institute of Technology. The goal of this new deal will be to engage in joint research regarding the topic of central bank digital currency.
An important point to note regarding this research partnership is the fact that the Bank of England has made it clear that it currently has no intention of launching its own CBDC at the current time. The work being conducted between the bank and MIT is purely for research purposes.
The Bank of England has researched this topic in the past. It previously released a report on the topic of a national digital currency. DCI weighed in on this by noting ways that the paper’s objectives could become a reality.
The bank has also worked in the past with HM Treasury to form a committee that studied central bank digital currency. This committee spent time analyzing various issues related to the topic. It also looked into ways that the currency could be used in the United Kingdom.
A key conclusion that was reached by the committee was the insight that a national digital currency could have some distinct advantages. At the same time, it is a matter that needs to be thoroughly researched to determine when there is a need for it.
In recent years, there has been massive interest in the topic of CBDCs. The Bank of England is far from the first central bank to look into this topic. Central banks in countries such as South Africa, Australia, the Bahamas, and Singapore have all engaged in CBDC projects and made significant progress. A few of these banks have already launched a national digital currency.
DCI has partnered with other major banking organizations in the past to look at the topic of CBDC. These organizations include the Bank of Canada which partnered with MIT to engage in a CBDC study. It also includes the Federal Reserve Bank of Boston which has been engaged in a study that operates under the name of the Hamilton Project. This project was launched in 2020.