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The United Kingdom Moves Towards Launching A Digital Currency

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The United Kingdom Moves Towards Launching A Digital Currency
07 Feb 2023
5 min read

News Synopsis

Britcoin is getting closer to becoming a reality. Authorities in the United Kingdom UK formally requested public feedback on the possibility of introducing a central bank digital currency on Monday, stating that British consumers and businesses are likely to need a digital version of the pound.

In terms of implementing a digital currency, Britain, which is home to the second-largest financial centre in the world, is lagging behind former colonies like Nigeria, the Bahamas, and Jamaica.

According to the consultant PwC, more than 80% of central banks around the world are either planning to introduce digital currencies or have already done so.

Treasury chief Jeremy Hunt said in a statement, "While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that's trusted, accessible and easy to use," 

"That's why we want to investigate what is possible first, whilst always making sure we protect financial stability."

The Treasury and Bank of England said almost two years ago that they were thinking about launching a digital currency, prompting the request for public input.

While the Bank of England has emphasized that the future currency shouldn't be confused with cryptocurrencies like Bitcoin, Prime Minister Rishi Sunak suggested naming the venture "Britcoin" while he was the Treasury chief.

In contrast to cryptocurrencies, which can vary greatly and endanger investors' holdings, the new currency, backed by the central bank, would be "reliable and retain its value over time," according to the Bank of England.

Recently, that industry has been particularly unsteady, intensifying calls for further regulation. Assets were destroyed by cryptocurrency collapses last year, and creator Sam Bankman-Fried was accused of fraud after the multibillion-dollar bankruptcy and collapse of the crypto exchange FTX in November.

According to the bank, the proposed digital currency would be worth 10 pounds, which would always be equivalent to a 10-pound note. The currency could be used to make electronic purchases of goods and services when kept in a digital wallet.

Supporters of central bank digital currencies claim that because they may be used by those without bank accounts, they broaden access to the financial system and make digital transactions simpler, cheaper, and easier.

One of the reasons the Bahamas became the first nation to launch a digital currency in 2020 is due to this. Since then, pilot projects have been conducted in China and more than 20 other countries, with Nigeria and Jamaica following suit. The US and the EU are thinking about implementing digital currency.

TWN In-Focus