The British Chancellor of the Exchequer, Rishi Sunak, told the Bank of England on Monday to investigate the matter for a new “Britcoin”, or central bank-backed digital currency, aimed at addressing some of the challenges facing cryptocurrencies such as bitcoin offers, to tackle.
A digital version of sterling supported by BoE could potentially enable businesses and consumers to keep accounts directly with the bank and bypass others when making payments, which will increase the role of lenders in the financial system .
“We are launching a new task force between the Treasury and the Bank of England to coordinate investigative work on a potential central bank digital currency (CBDC),” Sunak said at a conference in the financial industry.
Shortly afterwards, Sunak tweeted the single word ‘Britcoin’ in response to the announcement from the Ministry of Finance’s task force.
Other central banks are also considering whether to set up digital versions of their own currencies, increasing access to central bank funds that can only be used by commercial banks at present. This could speed up domestic and foreign payments and reduce financial stability risks.
China is a forerunner in launching a CBDC. Last week, the European Central Bank said it was studying an electronic form of cash to replenish banknotes and coins, but any launch is still a few years away.
The BoE said a digital version of sterling would not replace physical cash or existing bank accounts.
“The Government and the Bank of England have not yet made a decision to set up a CBDC in the UK, and will hold wide-ranging discussions with stakeholders on its benefits, risks and practicalities.”
BoE Governor Andrew Bailey earlier said bitcoin, the most well-known cryptocurrency, does not act as a stable value store or an efficient way of doing transactions, making it unsuitable to be a currency and a risky bet to serve investors.
Central banks are also considering Facebook’s efforts to set up its own digital currency.
Nevertheless, cryptocurrencies are gaining increasing interest from mainstream financial institutions, and bitcoin reached a record high of nearly $ 65,000 on April 14, which was ten times more.
DARKER TRADE
Sunak, which is launching the UK FinTech Week conference, has also announced other measures to maintain London’s competitiveness following Brexit, which is New York’s the world’s largest financial center.
Since Britain’s departure from the European Union on 31 December, the financial sector has been dealing with the service of EU clients.
Sunak has suggested lifting restrictions inherited from the EU, including who can trade shares in London and the double volume.
This will help Britain attract more “dark” or anonymous trading by large investors after Amsterdam overturned London in January as the largest equity hub in Europe.
“The consultation process aims to deliver a rulebook that is fair, results-based and supports competitiveness, while the UK maintains the highest regulatory standards,” Sunak said.
Britain will also propose amendments to the stock prospects of companies to ensure the rules are “not too strict”, Sunak said.
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