Essex academics join digital pound advisory group

  • Date

    Thu 4 Jan 24

Dr Marta Arroyabe and Professor Sheri Markose

Two University of Essex experts has been invited to join an academic advisory group focused on the possibility of a digital pound.

The Bank of England and HM Treasury are exploring the idea of launching a digital pound – an electronic version of cash which would be accessible through digital wallets. This new type of money would be for everyone to use for day-to-day spending and payments.

However, if introduced, it would complement, not replace cash. The Bank of England and the Government will take a decision on whether or not to introduce a digital pound in the second half of the decade.

The aim of the CBDC (central bank digital currency) Academic Advisory Group is to provide expert advice during the design phase of the digital pound, which would be issued by the Bank of England.

Both our experts will join academics from a range of disciplines including monetary policy, finance, competition economics, industrial organisation, behavioural science, law, innovation theory, marketing and computing on the advisory group.

Professor Sheri Markose, from Essex’s Department of Economics, is well known as a computational economist. As founder director of the multidisciplinary Centre for Computational Finance and Economic Agents, she pioneered postgraduate curriculum on FinTech and digital economy where the design of digital economy infrastructure, especially for payments and settlements and their systemic risk is her main area of expertise.

She has also developed models on cashlessness, which is driven by changes in payment habits from digital innovations in payments.

“The possibility of introducing a digital pound is an inevitable consequence of the digital revolution,” explained Professor Markose.

Also invited to the group is Dr Marta Arroyabe, from Essex Business School, whose expertise in innovation, digitalisation, cybersecurity, and entrepreneurship will all have a direct bearing on the CBDC.

A few countries already have their own version of a digital currency and over 100 countries are thinking about having a digital currency as a new way to pay.

Commenting on her appointment, Professor Markose said: “I’m delighted to be part of a potential momentous change in the monetary system as central banks explore changing demand for their notes and coins in payments, and the emergence of privately issued digital currencies.”

Professor Markose is developing large scale agent-based simulators to stress test different proposals and scenarios for the CBDC.

Dr Arroyabe added: “When it comes to innovation, for example, my research explores the decision-making processes and strategies that firms employ when embarking on innovation initiatives. This expertise aligns directly with the Bank of England and HM Treasury's work on CBDC, as the introduction of a digital pound would represent a significant financial innovation.

“My insights into firms' innovation strategies can shed light on how businesses may approach the adoption of this new digital currency.”

As the potential transition to CBDC introduces a new digital financial infrastructure, her expertise in understanding the interplay between digitalisation and cybersecurity will offer valuable perspectives on the potential challenges and considerations for businesses, particularly SMEs.