LONDON (CU)_Britain may be the next country to introduce its own digital currency, with Finance Minister Rishi Sunak requesting the Bank of England to look at the case of a new “Britcoin”, aimed at tackling some of the drawbacks of other cryptocurrencies such as Bitcoins.
“We’re launching a new taskforce 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.
Subsequently, the Finance Ministry issued a statement announcing the government’s plans to launch the new taskforce, to which the minister responded on Twitter with the single word “Britcoin?”
According to the statement, the taskforce will bring together Her Majesty’s Treasury and the Bank of England in order to explore a possible digital version of sterling. Moreover, two new forums will also be established to engage technical experts and key stakeholders such as financial institutions, merchants and consumers, through the process.
Nevertheless, the BoE says that a cryptocurrency would not be able to replace 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 engage widely with stakeholders on the benefits, risks and practicalities of doing so,” the central bank said.
It could be said that central banks usually take a dim view of digital currencies mainly owing to the fact that they are not regulated by a central authority. Previously, BoE Governor Andrew Bailey said that the best known cryptocurrency, Bitcoin, is ill-suited to serve as a currency as it fails to operate as a stable store of value or as an efficient way to conduct transactions.
Despite such skepticisms, digital currencies have received growing interest from investors, mainstream financial institutions, as well as several tech tycoons, including Elon Musk and Mark Zuckerberg. By mid-April, the value of a Bitcoin had grown by tenfold within a period of one year, reaching nearly $65,000 last week.
It is for this reason that other central banks have also considered whether to set up digital versions of their own currencies, which would in fact widen access to central bank funds which is are only used by commercial banks at the moment.
China has been a front-runner in this regard, becoming the first major economy to issue a blockchain-powered digital currency earlier this month. Meanwhile, the European Union is also said to be studying the possibility of launching a digital currency to complement banknotes and coins, although it may take several years for a concrete decision to be made.
