WBS to advise UK on introduction of a digital pound

WBS academic David Skeie has been included on a panel of experts to advise the Bank of England and the UK Government’s Treasury on developing a digital pound. 

In February 2023, the Bank of England and HM Treasury jointly issued a consultation paper setting out an assessment of the motivations and design choices for a potential digital pound or central bank digital currency (CBDC).  

While no decision has been made, that paper signalled that the digital pound is likely to be needed in the future, so the central bank and UK Government are moving onto a 'design phase'. 

Professor Skeie will be part of the CBDC Academic Advisory Group (AAG), which brings together experts from a range of disciplines, including monetary policy, finance, competition economics, industrial organisation, behavioural science, law, innovation theory, marketing, and business. 

The Professor of Finance, who is part of the Gillmore Centre for Financial Technology, said: “I am delighted to be part of this exciting project and have the chance to work with the Bank of England on a CBDC, something that could truly revolutionise how our financial systems operate. 

“We at the Gillmore Centre for Financial Technology have been researching this area for some time and I look forward to hearing other perspectives on a digital pound as part of such a diverse group of academics. 

“This is a momentous time of exploration for central banks as they investigate the technology behind CBDCs and how they will function in the real world. To be part of this historic leap into the future is inspiring and will ensure that the Gillmore Centre’s research is having an impact on how the UK moves forward with a digital pound.” 

A digital pound would not replace cash but would be another payment option issued by the Bank of England. Whether it comes to fruition and how it would work alongside the regulation of stablecoins that are already in existence is still to be decided, as was discussed at the Gillmore Centre for Financial Technology’s inaugural Policy Forum. 

What are the benefits of a digital pound?

With an estimated 1.1 million people in the UK unable to access a bank account, the introduction of a digital pound could help improve financial inclusion. It could also become a new monetary policy tool, make cross-border payments cheaper, and provide an alternative to high street bank accounts, though there is concern it could add to financial instability. 

Andy Lockett, Dean and Professor of Strategy and Entrepreneurship, said: “This is great news and testament to the research and expertise that Professor Skeie has acquired in a distinguished career. 

“As a school we have a tradition for impactful research that shapes policy and influences business, and this is another example of the practical implications of our world-class research. 

“The development of a digital pound is an exciting and potentially transformative initiative and to have Warwick Business School at the heart of this cutting-edge technology is indicative of our Change Maker values.”

Further reading:

Five ways a digital pound could change our world

Why would central banks want to issue digital currencies?

Central banks may use stablecoins as route to CBDCs

David Skeie is Professor of Finance and is part of the Gillmore Centre for Financial Technology. He teaches Corporate Finance on the Executive MBA, Executive MBA (London), Global Online MBA, and MSc Business & Finance. He also lectures on Financial Regulation and Supervision on Global Central Banking and Financial Regulation qualifications.