Not Bitcoins but 'Brit'coins! UK possibly to switch to new digital currency
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London, Apr 21: The inputs about new digital currency of the UK were provided by British finance minister Rishi Sunak, when he told the Bank of England to look at the case for a new 'Britcoin', or central bank-backed digital currency, aimed at tackling some of the challenges posed by cryptocurrencies such as bitcoin.
A BoE-backed digital version of sterling would potentially allow businesses and consumers to hold accounts directly with the bank and to sidestep others when making payments, upending the lenders' role in the financial system. Sunak told during a financial industry conference, "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 (CBDC)."
Soon after, Sunak tweeted the single word "Britcoin" in reply to the finance ministry's announcement of the taskforce. Other central banks are also looking at whether to set up digital versions of their own currencies, essentially widening access to central bank funds which only commercial banks can use at present. This could speed up domestic and foreign payments and reduce financial stability risks.
The BoE said a digital version of sterling would not replace either physical cash or existing bank accounts. "The Government and the Bank of England have not yet made a decision on whether to introduce a CBDC in the UK, and will engage widely with stakeholders on the benefits, risks and practicalities of doing so," the BoE said.