The Bank of England has created an international group to explore the possibility of developing a cryptocurrency backed by central banks.

The central banks of Japan, Sweden, Switzerland and the eurozone joined the initiative, together with the Bank of International Settlement (BIS).The group will look at the economic and technical benefits that a bitcoin-style digital currency could offer.

After Facebook announced plans to introduce a cryptocurrency called Libra last year,
Global focus on central bank digital currencies (CBDC) intensified. The European Central Bank subsequently expressed an interest in creating its own digital currency, while China has also moved forward with plans to launch a state-backed cryptocurrency.

The bank said that the group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies

Andy Bryant, co-head of popular cryptocurrency exchange BitFlyer, told The Independent that When the first national central bank issues a CBDC, this will be a major milestone in monetary history and a turning point for the global financial system,

However, at this stage, there is still a lot up for discussion. The particular design of each new CBDC — for instance, whether or not it bears interest — will have profound implications on its effectiveness as a monetary policy instrument.

They understand a shift to digital currencies won’t happen overnight. However, it is a part of a generational change being driven by people who have grown up with technology and see the world in a different way,” he said.

Over thousands of years, money has always evolved and most central banks would agree that the current international monetary system is now out of date.

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