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The Bank of England (BoE) has partnered with the Massachusetts Institute of Technology (MIT) to study the aspects faced when developing a CBDC system. This partnership is expected to last for a year.
According to the announcement, the Bank of England confirmed that the project aims to explore the underlying technologies. The project will not create a new central bank cryptocurrency (CBDC). This collaboration will involve the Bank of England and the MIT Media Lab’s Digital Currency Initiative (DCI). The statement states:
“This partnership is part of the Bank’s research and exploration for CBDCs. This project will focus on testing methods to access potential technology. No decision has yet been made on the rollout of CBDCs in the UK as it would be an important national project.”
The rapid growth of electronic assets has prompted regulators to publish the first regulatory framework for the sector.
The Bank of England started researching CBDCs in 2020 and has since released a document. The UK Treasury also set up an exploratory task force on the matter last April. The House Economic Affairs Committee has suggested a digital pound. They point to the advantage of cheaper and faster cross-border settlement and payments along with challenges to financial stability and privacy protection.
CBDC is a topic of great interest because of technological innovations in the financial system. Hiromi Yamaoka – Former director of the Bank of Japan said that Russia sanctions could spur more countries to adopt CBDCs. This will be seen as a shield against the USD’s position in the global financial system.
Yamaoka further shared that when discussing CBDCs, national security will be an issue worthy of attention.
Earlier this month, the University of Cambridge conducted a multi-year study with 16 different financial institutions. These institutions include WorldBank, IMF and Mastercard. The research aims to shed light on how fast cryptocurrencies are evolving. At the same time, the project will also study the ecosystem and the area of interest to many people is CBDC.
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