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‘Britcoin’ digital currency could be in use by end of decade

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Consumers could be using a new digital pound as an alternative to cash by the end of the decade under plans being drawn up by the Bank of England and the Treasury. The government is speeding up its response to the rise of privately issued cryptocurrencies and stable coins with a four-month public consultation process on a “Britcoin” starting on Tuesday. After the volatility of cryptocurrencies and the collapse of the crypto exchange FTX , the Bank and the Treasury will seek to reassure the public that a state-backed digital currency would be as safe as cash.

Officials will explore the technical issues involved in creating a central bank digital currency before a final decision is taken by the middle of the decade. Jeremy Hunt, the chancellor of the exchequer, and Andrew Bailey, the Bank of England governor, say the government could still decide against going ahead but momentum is building behind the idea. The consultation paper argues that a digital pound will be needed at some point in the future.

Assuming the go-ahead is given, the earliest date cash could be held in digital wallets offered to consumers by the private sector through smartphones or smartcards would be the end of the 2020s, the Bank and the Treasury say. Bailey said: “As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow. A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.

“However, there are a number of implications which our technical work will need to carefully consider. This consultation and the further work the Bank will now do will be the foundation for what would be a profound decision for the country on the way we use money. ” If introduced, the digital pound would be issued by the Bank of England and could be used to make payments in person or online.

It would be interchangeable with cash and bank deposits, and – as with the current system of notes – be issued in denominations of pounds sterling. No interest would be paid on pounds held in digital form. The Bank and the Treasury say a digital pound would be subject to rigorous standards of privacy and data protection.

“Like current digital payments and bank accounts, the digital pound would not be anonymous because the ability to identify and verify users is necessary to prevent financial crime,” they said. “This is essential for trust and confidence in money and therefore wide use of the digital pound. ” Other major central banks – including the US Federal Reserve and the European Central Bank – are looking at their own official digital currencies, although the UK plans are at a more advanced stage.

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after newsletter promotion The Bank and the Treasury believe the arrival of private digital currencies runs the risk of fragmenting the monetary system, and believe a reliable and efficient official option will be needed as use of cash continues to fall. Technological advances have made it possible for a range of cryptocurrencies to be launched but the Bank and the Treasury say the difference with a digital pound is that it would be backed by the state. Hunt said: “While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible and easy to use.

“That’s why we want to investigate what is possible first, while always making sure we protect financial stability. ”.


From: theguardian
URL: https://www.theguardian.com/business/2023/feb/06/britcoin-digital-currency-could-be-in-use-by-end-of-decade

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