The Bank of England (BoE) and the British Treasury are set to support the development of a British central bank digital currency (CBDC), known as “Britcoin” or “digital pound.”
The British CBDC discourse began in April 2021, when the British Treasury, then under the leadership of the current British Prime Minister Rishi Sunak, launched a joint task force with the BoE to evaluate the feasibility of a “digital pound” for British businesses and households.
Since then, there have been various discussions and reports as both financial authorities weigh the potential benefits and risks the “digital pound” could bring to the UK economy. After 21 months of research and consultation, it appears both parties have finally come to a decision.
UK ‘Maybe’ Needs CBDC
According to a Saturday report by The Telegraph, Governor of the Bank of England Andrew Bailey and Chancellor of the Exchequer (Treasury) Jeremy Hunt are expected to support the introduction of a digital currency owned by the state based on the reduction of the use of cash as the world develops. become a cashless, digital economy.
“Based on our work to date, the Bank of England and the British Treasury judge that there is a possibility that a digital pound will be needed in the future,” the governor and chancellor said in a consultation report provided to The Telegraph by an anonymous source.
“It is too early to commit to building infrastructure for one, but we believe that the preparatory work is more justified,” read another statement in this consultation report.
According to The Telegraph, the Bank of England and the British Treasury will go public with their stance next week, launching a road map that will lead to the success of the “digital pound” to the British economy by 2030.
So far, following the Telegraph report, there has been no official comment from the BoE or the British Treasury.
The main concern around CBDC
As the name suggests, a central bank digital currency is a digital token issued and distributed by a country’s central bank. CBDCs are created using blockchain technology, and they share the same value and functionality as a country’s fiat currency.
While many citizens and businesses are excited by the idea of a digital pound as the world embraces blockchain technology, there are still significant concerns about the implications of this financial move.
One major fear about the rise of the “digital pound” is that it will eliminate physical currency. However, the Bank of England has consistently reassured British citizens that the “digital pound” will be used alongside cash rather than as a substitute.
Another concern regarding the use of digital currencies is “state surveillance of people’s spending choices” as stated in the Lords Economic Affairs Committee report on CBDC published on January 30, 2023.
However, in a consultation report seen by The Telegraph, the BoE, and the British Treasury, stated that the CBDC will provide users with the same level of privacy as current forms of money except in legal situations that require access to individual transaction histories. .
That said, this reliable positive news about the “digital pound” only shows the growth of the blockchain industry in the last few years. However, cryptocurrency remains the biggest application of blockchain. After a somewhat tumultuous year in 2022, the crypto market is on the rise again, trading at a total market cap of $1.037 trillion based on data from TreadingView.
Crypto Market Capitalization at $1.037 Trillion | Source: TOTAL chart on TradingView.com.
Featured Images: Sky News, Charts from TradingView.com