''Britcoin'' not bitcoin? UK considers digital currency. The central bank-backed digital currency will help tackle some challenges posed by cryptocurrencies.

LONDON : British Finance Minister Rishi Sunak told the Bank of England last Monday to look at the case for a new ''Britcoin'', or central bank-backed digital currency, aimed at tackling some of the challenges posed 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.

''We're launching a new task force between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency [CBDC].'' Sunak told a financial industry conference.

Soon after Sunak tweeted the single world ''Britcoin'' in reply to the finance ministry's announcement of the task force.

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.

China is a front-runner to launch CBDC. Last week, the European Central Bank said it was studying an electronic form of cash to complement banknotes and coins but any launch was still several years away.

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 BOF said.

BoE Governor Andrew Bailey has previously said Bitcoin, the best known cryptocurrency, fails to act as a stable store of value or an efficient way to make transactions, making it ill-suited to serve as a currency and a risky bet for investors.

Central banks also took a dim view of efforts by Facebook to set up its own digital currency.

Even so, cryptocurrencies have received growing interest from mainstream financial institutions, and bitcoin hit a record high of nearly $65,000 on April 14, up ten fold in the space of a year.


Sunak launching the UK FinTech Week conference, also announced other measures aimed at maintaining the post-Brexit competitiveness of London, which vies with New York to be the world's largest financial centre.

Since Britain's departure from the European Union's orbit on December 31, the financial sector has faced restrictions on serving EU customers.

Sunak proposed removing restrictions inherited from the EU, including who can trade shares in London and the double volume cap.

This would help Britain attract more ''dark'' or anonymous trading by big investors after Amsterdam toppled London as Europe's top share trading centre in January. [Reuters]


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