The introduction of central bank digital currency (CBDC) in the UK will bring both opportunities and challenges to monetary policy, financial stability and payments. Before making a decision on whether to introduce CBDC, the Bank of England needs to ensure that the net benefits of paying users, the financial system, and the whole society will exceed all risks that may happen.
The platform model of CBDC proposed in this paper is to lay the foundation for further discussion and research, rather than as a blueprint for the final design of CBDC. So far, the work of the Bank of England has mainly focused on some methods to maximize its benefits and reduce risks when designing CBDC. However, there are still many issues that need to be seriously considered. The work to be carried out will focus on the following aspects:
(1) Impact on payment: understand the benefits that CBDC can bring to payment users and other economic entities, while taking into account the changing payment needs with the increasing digitization of the economy. This includes understanding how CBDC can complement or promote other measures to improve payments, especially the major improvements currently underway in the UK.
(2) Impact on monetary and financial stability: quantify the benefits and impact of CBDC on monetary and financial stability and clarify the methods to reduce risks, including understanding the impact of CBDC on the central bank’s own balance sheet and business.
(3) Functions and terms of CBDC: Improve the design of CBDC to maximize benefits and minimize risks, while ensuring that the roles played by the public and private sectors are appropriate.
(4) Technology: Know which technology is most suitable to provide support for the operation of CBDC, including how the central bank builds a CBDC system that can lead to significant innovations in the payment field.
