The Bank of England and the Treasury have released a consultation paper on the potential for a UK ‘digital pound’ or central bank digital currency.
Research into the digital pound is now underway by the Bank of England and is asking for public opinions on the subject.
Andrew Bailey, governor, Bank of England, said: “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.”
The Treasury and Bank of England claimed the digital pound would be “risk-free, highly trusted and accessible”.
Cryptocurrency is a digital version of currency that does not require the use of any third party such as a government or bank.
However, the government has said that the digital pound would be “issued by the Bank of England”, with either not having access to anyone’s personal data and “have the same level of privacy as a bank account”.
“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,” said Jeremy Hunt, chancellor of the exchequer.
While colloquially described as ‘Britcoin’, the digital pound will come in the form of a Central Bank Digital Currency (CBDC), which is distinguished from traditional cryptoassets like Bitcoin, due to it being distributed from a centralised authority.
A consultation on a digital pound comes after the government outlined proposals for regulation of crypto assets, that would see users receive their assets in the event of a crypto business failing.
No decisions on the UK digital currency have been made as of yet but any that are introduced would be swappable with cash and bank deposits.
It appears that Rishi Sunak is making steady progress on his goal of making the UK a hub for cryptoassets that he set out during his time as chancellor but still no word on the Royal Mint’s NFT.
Cryptocurrency and cryptoassets are most likely to fall under the remit of the new Department for Science, Innovation and Technology unveiled this week.