The United Kingdom has become the latest country to plan for a central bank digital currency (CBDC) launch as Chancellor Rishi Sunak announced on Monday the formation of a joint task force by the HM Treasury and Bank of England (BoE).
“We’re launching a new task force between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency (CBDC),” Sunak said while addressing a financial industry conference.
The latest move is viewed as the country’s step against the rising threats of a cryptocurrency economy. Sunak even tweeted the name ‘Britcoin’, but no such names were approved officially.
— Rishi Sunak (@RishiSunak) April 19, 2021
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Despite the progressive move, the British central bank clarified that no official decision has been made yet to introduce the digital version of the pound sterling, and the task force will only engage widely with stakeholders on the benefits, risks and practicalities of a CBDC.
However, the monetary regulator specified that such a digital version of sterling will not affect the cash-based economy and the existing monetary system.
With China being a forerunner among the major economies to launch a digital currency, central banks around the world are now considering the launch of their respective digital fiats. In addition, the BoE was a participant of an earlier formed consortium of several top global central banks to study the feasibility of a CBDC.
Regaining Financial Dominance
On the other hand, Sunak’s plan is looking to drag Britain out of the financial impact of Brexit through innovation.
“Our vision is for a more open, greener, and more technologically advanced financial services sector. The UK is already known for being at the forefront of innovation, but we need to go further,” the Chancellor said.
“The steps I’ve outlined today, to boost growing fintech, push the boundaries of digital finance, and make our financial markets more efficient, will propel us forward. And, if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial center.”