Cryptocurrencies like Bitcoin are 'apolitical' says financial expert
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The Bank of England has launched a consultation into whether the UK could get its very own cryptocurrency. The consultation, which will begin in 2022, will look into what needs to be done to support a digital currency – which has been dubbed ‘Britcoin’.
The Bank’s deputy governor for financial stability, Jon Cunliffe said: “The plan to publish a consultation next year on CBDC is a crucial step in our policy development, especially as we further our thinking on the pressing issues at hand.
“What it will do is provide a platform for interested parties and relevant groups to engage with the key questions on the merits of CBDC, and whether the public sector should advance to a development phase.”
John Glen MP, the Economic Secretary to the Treasury, said this week: “This consultation will begin an open discussion on the role a UK central bank digital currency might play in the UK.
“I’d encourage everyone to contribute to the discussion so we can explore the opportunities this could bring, as well as understanding any risks it may pose.”
READ MORE: ‘Britcoin’ consultation launched – how safe is crypto?
What is ‘Britcoin’?
The Bank has said that if put into practice, a CBDC would be a new form of digital money issued by the Bank of England.
Britcoin could be used by anyone for their everyday payments needs – including businesses.
The token would exist alongside cash and bank deposits, rather than replacing them.
How would it work?
According to the Bank of England: “If a CBDC were to be introduced, it would be denominated in pounds sterling, just like banknotes, so £10 of CBDC would always be worth the same as a £10 note.”
The bank says it could “ create new opportunities for payments”, but has also acknowledged there could be issues that would need to be managed “very carefully”.
Mr Cunliffe said last month that cryptocurrencies already available should be regulated as a “matter of urgency” given that these currencies have “no intrinsic value”.
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When would ‘Britcoin’ launch?
The central bank has said no launch would take place before 2025.
Cryptocurrencies are among the most valuable digital assets, but are not incorporated into standardised, national currency systems.
This week bitcoin, the world’s most valuable cryptocurrency, reached an all-time high of $68,000 (£50,000).
Last month, Mr Cunliffe acknowledged bringing these currencies into the “regulatory perimeter will help ensure that the potentially very large benefits of the application of this technology to finance can flourish in a sustainable way.”
The Bank of England has said it is keen to stress that any UK based digital currency would be fundamentally different to other crypto assets and currencies.
Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, said: “Regulators and central banks are walking a tricky tightrope, recognising the need to foster new decentralised payments technology but ensuring enough rules are in place to prevent runaway speculation infecting the wider financial sector.”
Other countries have introduced their own versions of “Britcoin” – the Bahamas launched the Sand Dollar in October 2020 after a pilot in 2019, while China has been working on a CBDC since 2014 and launched pilots in 2020.
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