Bank of England and UK Treasury Supports ‘Digital Pound’ Project, Says UK is Likely To Need CBDC
The Bank of England (BoE) and the UK Treasury are expected to support the development of the British central bank digital currency (CBDC), popularly known as “Britcoin” or “digital pound”.
The talk of a British CBDC began in April 2021 when the UK Treasury, then under the leadership of the current UK Prime Minister Rishi Sunak, launched a joint task force with the BoE to assess the feasibility of a “digital libra” for British businesses and households.
Since then, there have been numerous discussions and reports as both financial authorities have assessed the potential benefits and risks that a “digital pound” could bring to the UK economy. After 21 months of research and consultation, it looks like both parties have finally reached a decision.
UK ‘probably’ will need CBDC
According to a Saturday report by The Telegraph, Bank of England Governor Andrew Bailey and Chancellor of the Exchequer (Treasury) Jeremy Hunt are expected to support the introduction of the state-owned digital currency based on an expected decrease. in the use of money as the world evolves. in a cashless digital economy.
“Based on our work to date, the Bank of England and the UK Treasury are of the opinion that a digital pound is likely to be needed in the future,” the governor and chancellor said in a consultation report submitted to The Telegraph by anonymous sources.
“It is too early to commit to building the infrastructure for one, but we are convinced that further preparatory work is warranted,” read another statement in this consultation report.
According to The Telegraph, the Bank of England and the UK Treasury will release their position next week, launching a roadmap that will lead to the successful introduction of the “digital pound” into the UK economy by 2030.
So far, following the Telegraph report, there has been no official comment from the BoE or the UK Treasury.
Main concerns about CBDCs
As the name implies, a central bank digital currency is a digital token issued and distributed by the central bank of a country. CBDCs are created using blockchain technology and share the same value and functions as a country’s fiat currency.
While many citizens and businesses are excited about the idea of a digital pound as the world embraces blockchain technology, there remain significant concerns about the implications of this financial move.
A major fear surrounding the emergence of a “digital pound” is the eventual elimination of physical currency. However, the Bank of England has continually assured the British public that the “digital pound” will be used alongside cash, not as a substitute.
Another concern surrounding the use of digital currency is “state surveillance of people’s spending choices”, as stated in the Lords Economic Affairs Committee report on CBDCs published on 30 January 2023.
However, in the consultation report seen by The Telegraph, the BoE and the UK Treasury, it states that CBDCs will offer users the same level of privacy as current forms of money, except in legal circumstances that may require access to history. of an individual’s transactions. .
That said, this plausible positive news of a “digital pound” just goes to show the impressive growth of the blockchain industry in recent years. However, cryptocurrency remains the biggest application of the blockchain. After a rather turbulent year in 2022, the cryptocurrency market is on the rise again, trading with a total market cap of $1.037 trillion based on data from T.radingView.
Cryptocurrency Market Capitalization at $1.037 Trillion | Source: TOTAL Chart at TradingView.com.
Featured Image: Sky News, chart from TradingView.com