Minutes: CBDC Academic Advisory Group – March 2025

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Italy Imposes Curfew to Curb New Virus Surge, Misinformation

Rome officials didn’t indicate that any lockdown variant would be declared, and no details were given about when the curfew would start, except that it would be in effect from Saturday.

• Italy only started issuing daily updates on Wednesday after the government came under criticism.
• “We’ve seen a 37% increase in Covid cases as the number of tests has risen in the last week,” Health Minister Roberto Speranza reportedly said.
• Italy, which had one of Europe’s highest death tolls by the time cases first surged in late February, hasn’t locked down since.
• The measures represent the first time Italy has imposed such strict measures since lifting a national lockdown in early May.

The country, including Lombardy, the region worst hit by the coronavirus in Europe last spring, will be hit hardest by the new measures.

Covid victims remembered as Italy rebuffs restrictions

• Early in the pandemic, Italy was the epicenter of Europe, widely regarded as success in controlling the first Covid wave, although the economy took a beating.
• Yesterday, the country performed 117,768 swabs, with a positivity rate of 11%, slightly up from Thursday and the highest since September 18.
• According to media reports, the country’s total number of cases since the beginning of the pandemic stands at 155,470.

In ceremonies Friday, Italy honored the victims of the virus. The government rebuffed calls for a complete lockdown during celebrations of All Souls Day.

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Date: 12 March 2025

Item 1: Welcome

Nick McLaren (chair) welcomed members to the fourth Academic Advisory Group (AAG) meeting. He outlined the agenda and discussed the purpose of the meeting. Subgroups formed at the last meeting of the AAG (December 24) would present their initial thinking based on their topic of focus. This would allow other AAG members to provide views to shape the future work.

The chair noted the importance of the AAG subgroups’ work for the ongoing digital pound design phase. They ensure that the insights from academic research are used to inform and challenge the Bank and HMT’s work on the blueprint and the assessment.

The chair also flagged to members the publication of the progress update, blueprint framework design note and the announcement of the Digital Pound Lab. Members were keen to hear more about this work going forwards.

Item 2: Subgroup discussion – Uniformity & Alternatives

Subgroup headline question: Is a digital pound likely to meet the core objective of money uniformity, and is it the best option?

The subgroup began by highlighting there is no widely agreed definition of uniformity, and the existing academic literature does not determine to what extent uniformity is desirable. Acknowledging there is not a perfect definition, the subgroup outlined their working definition of uniformity as being a fixed exchange rate of 1:1 between different forms of money. They noted that the existing literature on uniformity was varied, but there are two distinct areas of focus. One is the role of public versus private money, and the second is competition in payments.

The subgroup explained that uniformity in money was not always necessarily needed to underpin a functioning economy and financial systems. But while you can question whether it is strictly necessary, the subgroup believes there are reasonable arguments that there is a case for the benefits of uniformity, which are similar in some respects to exchange rate stability, notably low transaction and information costs. Even small variations between the value of different types of money could more than offset any benefit from lower transaction costs.

The subgroups review of academic literature suggests households do not necessarily need to be able to convert into central bank money in order for uniformity to be prevalent, but that this is likely to support uniformity as it fosters trust in private forms of money. However, further research on these issues would be warranted, as there is still relatively little research on these issues.

If a conclusion was reached that convertibility into central bank money is a key component, then it might support elastic supply, and potentially renumeration, of a digital pound. In principle, imposing individual limits on holdings of a digital pound by individuals and businesses could lead to rationing, and therefore impact on uniformity. The subgroup has, therefore, so far concluded that adjustments to the rate of remuneration might work better than physical limits in controlling household holdings of a digital pound.

Discussion

The chair thanked the subgroup for their work, before turning to other AAG members for discussion. Members discussed the importance of payment systems working well for the public, with a focus on simplicity. The need for a single unit of account and monetary sovereignty was emphasised. One member noted that while members of the public may not be familiar with the concept of uniformity, having a single unit of account may play a similarly important role to an agreed standard for measuring distances, weights, volumes, etc.

The discussion focused on whether a digital pound is necessary for achieving financial inclusion, its role as a public good and the challenges of maintaining uniformity in the financial system. The discussion also touched on the historical context of multiple exchange rates and the equilibrium outcome of uniformity. The group agreed on the importance of a single unit of account and the need for a trusted institution to implement standards.

The next steps for the subgroup’s work focused on the definition of uniformity and considering lessons that can be learnt from optimal currency areas, focusing on the best design for a digital pound versus alternatives.

ussed the key role of user experience in driving adoption and encouraging innovation, noting that it goes beyond simply the technology involved but also encompasses ease of use and understanding for end users. The impact of a digital pound on financial services access was debated, with the view that it could potentially enable more people to access financial tools and services that were previously inaccessible. The subgroup highlighted the importance of maintaining a balance between user privacy and regulatory requirements, particularly in the context of anti-money laundering (AML) and counter-terrorism financing (CFT) regulations. They acknowledged that while privacy is important, it must be balanced with the need to prevent illicit activities.

Members discussed the complexities of financial inclusion, noting that lower income households often pay more for financial services. The importance of correctly marketing a digital pound to drive adoption was highlighted. The changing landscape around stablecoins and the global regulatory responses were considered crucial, with potential benefits driving user adoption. The risks to innovation, particularly if implemented poorly, were noted.

The idea of minimum basic products was suggested to drive lower-level usage. The need to differentiate the digital pound from existing payment methods, targeting merchants with tangible savings, was emphasised.

The focus on innovation and growth was linked to financial inclusion, suggesting they may complement each other. The discussion concluded with a focus on the right environment for innovation and competition, debating whether improving existing payment infrastructure or creating a new form of money would be more effective.

Item 7: AOB

The chair thanked all the subgroups and noted the Bank was looking forward to the June meeting, with each subgroup providing more detailed presentations on these topics.

The chair reminded members of the Bank’s plans to host a conference in September which will cover some of these issues, and more detail would be shared in due course.

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