‘Britcoin’ could arrive in the second half of the decade
CNN
By Julia Horowitz, CNN
The United Kingdom is pushing ahead with plans to create a digital pound issued by the Bank of England that would offer a stable alternative to bitcoin or ether.
The central bank and the UK Treasury said Monday that an official digital currency is “likely to be needed in the future.”
“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,” UK finance minister Jeremy Hunt said in a statement. “That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”
The Bank of England and the Treasury said the decision about whether to roll out a digital pound, which has been nicknamed “Britcoin,” would be made around the middle of the decade.
Central banks around the world are considering whether to issue digital currencies as more parts of the economy move online. Unlike cryptocurrencies that are currently available, these coins would have official backing, which would result in a stable value and mean they could be used for everyday spending.
In the United Kingdom, £10 of a digital pound would be worth £10 in cash. The Bank of England would provide the foundational public infrastructure — or a “core ledger” — while private companies would issue digital wallets that could be accessed via smartphones or smartcards.
Central bank digital currencies could make online spending more convenient, ease cross-border transactions and boost competition among providers of digital financial assets.
In a speech in November, Sir Jon Cunliffe, deputy governor of the Bank of England for financial stability, said that without a digital pound, a few big players could “dominate and perhaps control innovation in payment services.”
But major details of digital currencies still need to be hashed out. Critics worry that their rollout by central banks could cause enormous disruption if people race to swap cash for a digital alternative. Another fear is privacy, since digital currencies would give governments new insights into how people are spending their money.
The Bank of England and the UK Treasury said a limit on holdings of a digital pound “would apply at least in the introductory phase,” and that the new currency “would be subject to rigorous standards of privacy and data protection.”
Still, they acknowledged that its use would not be anonymous, given the need to guard against financial crime and maintain public trust.
More than 100 countries have been exploring the idea of digital currencies issued by central banks, according to the Atlantic Council. Sweden has been working with Accenture on an e-krona, while Ghana is piloting an e-cedi and Indonesia is developing a prototype for a digital rupiah. Eleven countries, including The Bahamas and Jamaica, have already launched central bank digital currencies.
Efforts among bigger economies are also accelerating. China is out front, with more than 260 million people already using the digital yuan as part of a pilot program there.
In November, top global banks kicked off a 12-week pilot testing transfers in digital US dollars with the Federal Reserve Bank of New York. The European Central Bank, for its part, should wrap up its investigation into a digital euro this year.
These projects do not appear to be affected by the recent collapse of major crypto exchange FTX nor by huge swings in the price of cryptocurrencies over the past year. Bitcoin saw its value plunge 64% in 2022. It’s up about 38% year-to-date as investors show greater willingness to park their money in risky assets.
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