Digital pound: UK planning to launch ‘Britcoin’ for the crypto age
The UK government is considering introducing a digital pound by the Bank of England (BoE) that could be used by households and businesses for everyday payments in-store and online.
Stablecoins are designed to have a predictable value linked to traditional currencies or assets such as gold.
The currency, for use by households and businesses, would sit alongside cash and bank deposits, rather than replacing them.
"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,” chancellor Jeremy Hunt said.
"That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability,” he added.
A so-called central bank digital currency (CBDC) would use blockchain technology currently used by cryptocurrencies to record transfers on a central digital ledger.
Read more: Britcoin: Bank of England says earliest launch for digital pound could be 2025
A CBDC would allow a wider range of businesses – and potentially individuals – to hold electronic money in accounts directly with the BoE, potentially cutting out banks which have this right at present.
Bank of England governor Andrew Bailey, said: “As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow.
"A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability."
“However, there are a number of implications which our technical work will need to carefully consider. This consultation and the further work the Bank will now do will be the foundation for what would be a profound decision for the country on the way we use money,” he added.
The CBDC – which has been dubbed “Britcoin” by some press – would also allow people to hold digital currency on devices such as smartphones without the need for a bank account, similar to how physical cash can be held in a wallet.
Countries around the world are considering similar proposals including the eurozone and the US and China.
Unlike crypto assets and stablecoins, the digital pound would be issued by the BoE and not the private sector.
Read more: 'Britcoin': Central bank digital currencies explained
“This means that it will have intrinsic value and not be volatile, unlike unbacked cryptoassets as there would be a central authority to back it,” the Treasury said in a statement.
A decision about whether to implement a digital pound will be taken “around the middle of the decade” and will largely be based on future developments in money and payments.
“The earliest stage at which the digital pound could be launched would be the second half of the decade,” Treasury added.
However, no decision has been taken at this stage to introduce a digital currency.
Watch: Bank of England looks into launching its own 'Britcoin'
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