The Bank of England will work with MIT on a research project on CBDCs. This project will run for 12 months and is part of the bank’s work of exploring the opportunities held by central bank digital currencies.
Details of the Collaboration
The Bank of England joins a growing list of central banks that are stepping up their efforts when it comes to CBDCs. Recently, the central bank announced that it was working with the Massachusetts Institute of Technology on a joint research project into central bank digital currencies.
According to the announcement, the research project will last for 12 months. It will explore the potential challenges, opportunities, and risks that come with designing a CBDC system. For the project, the BOE will work with the Digital Currency Initiative (DCI) team in MIT’s Media Lab.
Part of Wide Research Efforts
The Bank of England has been exploring a CBDC for quite a while now. In the announcement, the bank stated that the joint research was part of its wider efforts to explore and experiment with different technologies that could be used to launch a CBDC. According to the BOE, the work will focus on exploring technology and is not going to focus on creating an operational CBDC.
Thus far, the BOE has not issued a timeline for the issuance of a CBDC. Additionally, it has not stated whether or not it would issue a CBDC at any time in the future. The bank believes that issuing a CBDC would be a major national infrastructure project. Consequently, undertaking such research helps to inform wider policy thinking when it comes to CBDCs.
MIT and CBDC Research
England is not the only country to work with MIT on a CBDC. The Bank of Canada has also been working with MIT on CBDC research. As with the BOE collaboration, the project will last for 12 months. It will also focus on advanced technologies related to CBDCs.
Central Banks and CBDCs around the World
Globally, CBDC research by central banks has been heating up. For instance, the European Central Bank announced that it had begun phase one research for a Digital Euro. The research would focus on addressing key issues around the design and distribution of a CBDC within the Eurozone. Other banks such as the central bank of Kenya, the central banks of Jamaica, and South Korea, have also begun serious research into CBDCs. Recently, the bank of Korea announced that it had completed phase one of its CBDC testing.
To date, China remains a leader when it comes to CBDC research. Most research around CBDCs began when China announced its CBDC plans. However, no major economy has launched a CBDC around the world. Nevertheless, whether a CBDC will be launched by a major economy or not is now just a matter of who will do it first. When that happens, it is not clear what the effect on decentralized cryptocurrencies like Bitcoin will be.
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