The UK's central bank, Bank of England, has rolled out a discussion paper in which it described an illustrative model of central bank digital currency (CBDC).
The bank says it is now time to look further ahead and consider what kind of money and payments will be needed to meet the needs "of an increasingly digital economy."
"We are in the middle of a revolution in payments. Banknotes — the Bank’s most accessible form of money — are being used less frequently to make payments," the bank says.
The watchdog also admits fintech firms have begun to alter the market by offering new forms of money and new ways to pay with it.
However, the bank highlights these firms may pose some new risks, and raise a number of profound questions for the bank. The Bank of England says it wants to begin a dialogue "on the appropriate design of CBDC and an evaluation of whether the benefits of CBDC outweigh the risks."
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