UK Plans To Launch Its Own Digital Currency

The Bank of England and HM Treasury have recently announced the creation of a Central Bank Digital Currency (CBDC) Taskforce to develop the UK own CBDC. The initial task is to review the risks and opportunities involved in creating a new kind of digital currency. “We’re launching a new taskforce between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency,” UK Finance Minister Rishi Sunak said at a fintech industry conference.

Britain is the latest nation to begin testing out the idea of a central bank-issued blockchain digital currency, which to date have largely been focused on a substitute for cash in circulation rather than saving deposits. A CBDC would be a new form of digital money issued by the Bank of England and for use by households and businesses. It would exist alongside cash and bank deposits, rather than replacing them.

The group will consult with stakeholders to explore how viable launching a CBDC would be, as well as how this is being handled abroad. “Our vision is for a more open, greener, and more technologically advanced financial services sector,” said the chancellor Rishi Sunak. “The UK is already known for being at the forefront of innovation, but we need to go further. 
“The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward. And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.”

The Bank of England has also announced it will establish a CBDC Unit. This new division of the Bank of England will lead its internal exploration around CBDC. It will also lead the Bank’s external engagement on CBDC, including with other UK and international authorities. The Deputy Governor for Financial Stability, Jon Cunliffe, will oversee the work of the CBDC Unit.
Fintech firms will also be offered a ‘scale box’, which is a package of measures designed to guide these companies scale-up. This comes alongside a ‘scale up’ visa stream to allow skilled people a route to work at a recognised UK scale-up without the need for sponsorship.

CBDCs leverage blockchain-based accounting techniques but, being backed by a central bank, the currency would not display the price volatility of cryptocurrencies like Bitcoin. 

Bank of England:      ITPro:        ZDNet:     NBC:        BBC:     Image: Unsplash

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