The Bank of England shook things up last Friday by announcing a new partnership with the good folks at the Massachusetts Institute of Technology Media Lab Digital Currency Initiative (DCI). They’re kicking off a one-year research project focusing on central bank digital currencies (CBDCs). Before you get your hopes up, this research is strictly for academic purposes—no digital pounds in your wallets just yet!

A Journey Started in 2020

Since 2020, the Bank of England has been all eyes on CBDCs. Remember back in March 2020, when the bank released a discussion paper? Well, the DCI jumped in with some exciting ideas on how a CBDC could tick the boxes outlined in that paper. Fast forward to April of last year, the bank and treasury were busy forming an exploratory task force to dig deeper into this fascinating world of digital currencies. Just this Thursday, the bank unveiled its latest thoughts on the matter, keeping the conversation alive and flowing.

Mixed Feelings from the House of Lords

Isn’t it always interesting to see different perspectives in a debate? The House of Lords Economic Affairs Committee chimed in earlier this year, sharing a mix of opinions on a potential digital pound. They highlighted some nifty advantages, like speedy settlement times and cheaper cross-border payments, but they didn’t shy away from voicing concerns about financial stability and privacy protection. Talk about a balancing act!

Joining Forces in Digital Currency Research

The Bank of England isn’t alone in its CBDC exploration adventures. It’s joining forces with other heavyweights like the Federal Reserve Bank of Boston and the Bank of Canada, both partnering with the DCI, the masterminds behind the OpenCBDC project. Just last week, the Bank of Canada made a similar announcement about launching a collaborative research effort. Meanwhile, the Boston Fed’s journey began way back in 2020. If only we could fast-forward through this research phase!

A Global Trend on Digital Currency

While the Bank of England and MIT embark on their research journey, they’re not the only ones surfing the CBDC wave. Around 60 countries are hard at work researching CBDCs, with about 15 pilot projects already set in motion. China’s digital yuan is probably the most talked-about initiative right now, but Australia, Malaysia, Singapore, and South Africa have all jumped into the Bank of International Settlement Innovation Hub’s Project Dunbar together.

Real-World Examples: The Pioneers of CBDC

When it comes to launching CBDCs into the real world, some countries are already strutting their stuff. Nigeria and the Bahamas have successfully launched their own digital currencies, while Jamaica is gearing up for a launch later this quarter. In Nigeria, the eNaira was crafted with help from fintech firm Bitt. So, while the UK is just getting started, others are already taking the plunge!