British Finance Minister Rishi Sunak told the Bank of England on Monday to look into the case of a new “Britcoin”, or digital currency backed by the central bank, aimed at meeting some of the challenges posed by cryptocurrencies such as bitcoin .
A digital version of the BoE-backed pound sterling would potentially allow businesses and consumers to hold accounts directly with the bank and dodge others when making payments, increasing the role of lenders in the financial system.
“We are launching a new working group between the Treasury and the Bank of England to coordinate exploratory work on a possible central bank digital currency (CBDC),” Sunak said at a financial industry conference.
Shortly afterwards, Sunak tweeted the single word “Britcoin” in response to the announcement by the finance ministry working group.
Other central banks are also studying whether to set up digital versions of their own currencies, essentially expanding access to central bank funds that only commercial banks can currently use. This could speed up domestic and foreign payments and reduce risks to financial stability.
China is a leader in launching a CBDC. Last week, the European Central Bank said it was studying an electronic form of cash to supplement banknotes and coins, but there were still several years to go.
The BoE said a digital version of the pound sterling would not replace existing physical cash or 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 work extensively with stakeholders on the benefits, risks and practices of doing so,” he said. say the BoE.
BoE Governor Andrew Bailey has previously said that Bitcoin, the best-known cryptocurrency, does not function as a stable store of value or an efficient way to make transactions, making it unsuitable to serve as a currency and a bet. risky for investors.
Central banks also had a weak view of Facebook’s efforts to establish its own digital currency.
Still, cryptocurrencies have received growing interest from major financial institutions, and bitcoin hit a record high of nearly $ 65,000 on April 14, a split within a year.
DARK TRADE
Sunak, who launched the UK’s FinTech Week conference, also announced other measures aimed at maintaining the post-Brexit competitiveness of London, which competes with New York to be the world’s largest financial center.
Since Britain’s exit from the European Union’s orbit on 31 December, the financial sector has suffered from restrictions on serving EU customers.
Sunak proposed removing restrictions inherited from the EU, including who can trade shares in London and the double-volume limit.
This would help Britain attract more “dark” or anonymous transactions by large investors after Amsterdam toppled London as Europe’s main stock trading center in January.
“The consultation process aims to provide a rulebook that is fair, results-based and supports competitiveness, while ensuring that the UK maintains the highest regulatory standards,” Sunak said.
Britain would also propose changes to the company’s stock brochures to ensure the rules “aren’t too heavy,” Sunak said.
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