The digital pound will not replace cash
Treasury Secretary Jeremy Hunt has said that the digital pound sterling (MDBC), or “Britcoin”, will be issued and backed by the Bank of England, but this will not abolish the use of cash.
The Bank of England (BoE) and the UK Treasury are preparing plans to create a digital currency that could “provide a new payment method” without necessarily replacing cash.
A joint consultation paper on central bank digital currencies (MDBCs) is due to be released on February 7, in which the Bank of England and the Treasury explore how – and if – they should proceed with the creation of an MDBC.
In a public statement on Feb. 6, Treasury Secretary Jeremy Hunt indicated that the two organizations will seek to develop a modernized digital payment system that does not necessarily ban the use of cash.
“While cash is not going anywhere, a digital pound sterling issued and backed by the Bank of England could be a reliable, affordable and easy-to-use new payment method,” he said, adding that “first we want to explore what is possible,” while this always taking care of financial stability.
Another key area will be providing a government-backed alternative to private stablecoins, with BoE and Treasury officials expecting big tech companies to develop some in the coming years.
As part of the statement, Bank of England Governor Andrew Bailey stressed that “the digital pound will provide a new way to pay, help businesses, maintain confidence in money and better protect financial stability.”
“However, there are a number of implications that need to be carefully considered in our technical work. This consultation and the additional work that the bank will now do will form the basis of what will be a major decision for the country on how we will use the money.”
Bank of England Deputy Governor John Cunliffe is expected to give a speech on February 7 to brief the financial industry on the work of the central bank and MDBC.
If they decide to go further, it is assumed that the digital pound and its underlying blockchain-based system will not be created until at least 2025.
In April 2021, current Prime Minister and former Treasury Secretary Rishi Sunak asked the Bank of England and the Treasury to cooperate and form a Central Bank Digital Currency Task Force. The duo is primarily responsible for overseeing the study and potential adoption of the digital pound sterling.
While progress has been slow so far given the cautious stance of the Bank of England and the Treasury, the latter posted a job posting on LinkedIn on January 24 calling for the job of CEO. about 20 people. focused on exploring the potential “digital pound sterling”.
Brian Quarmby, Cointelegraph
Brian Quarmby discovered cryptocurrency in 2013 and immediately fell in love with the idea of decentralization. Since then, Brian has lived and worked in Asia and returned to Melbourne at the end of 2019. Brian is passionate about sports and the arts and is optimistic about the potential of the NFT to change the lives of artists in the near future.
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