CBDC: UK is set to explore a digital pound

TL;DR Breakdown

• The UK government is set to research a potential CBDC, together with the Bank of England.
• An exploratory taskforce for CBDC is being launched between BoW and the UK Treasury

The United Kingdom has become the latest developed nation to announce interest in exploring a potential central bank digital currency, which might be dubbed “Britcoin,” as tweeted by the British finance minister, Rishi Sunak.

Britcoin? #UKFW21 https://t.co/Slk5lwUvrV

— Rishi Sunak (@RishiSunak) April 19, 2021

UK begins studying CBDC

According to Reuters’ report on Monday, the Bank of England has been told to consider exploring a potential digital version of the nation’s fiat currency. The development aims at addressing the challenges with Bitcoin and other cryptocurrencies. Among other things, a central bank digital currency would allow consumers and businesses to directly hold accounts with the Bank of England.

In a financial industry conference, the Finance Minister mentioned that a taskforce is being launched to explore a potential digital pound.

“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 said.

Meanwhile, the UK government and the BoE currently do not have any intention to launch the nation’s digital currency at the moment. BoE added that they “will engage widely with stakeholders on the benefits, risks, and practicalities of doing so.”

More banks are researching CBDC

Central bank digital currencies became a widely-discussed topic amongst central banks as cryptocurrencies became more popular. Over the past years, several banks have shown interest in researching CBDC

China is at the frontline among developed countries. The Asia largest economy has since engaged in a pilot program for a digital yuan, wherein millions of dollars have been given away to local residents. Japan is also studying the concept of CBDC, although it doesn’t have plans to issue one right away.