A state-backed digital pound is likely to be launched later this decade, according to the Treasury and the Bank of England.
Both institutions want to ensure the public has access to safe money that is easy to use in the digital age.
Chancellor Jeremy Hunt said the central-bank digital currency (CBDC) could be a new “trusted and accessible” way to pay.
“We want to investigate what is possible first, whilst always making sure we protect financial stability,” Mr Hunt said.
However, optimistically any technical capacity to support such an initiative will not be available until at least 2025, only serves to send a message that a “Global UK” in a world of innovation; doesn’t intend to set its stall out and take the lead in alternative finance.
But while it may use technology similar to cryptocurrencies such as Bitcoin and Ethereum, the digital pound, issued by the Bank of England, would be less volatile. Ten digital pounds will always be worth the same as £10 in cash, according to the UK Treasury.
The Treasury and the Bank of England will formally start a consultation for the digital currency, on this month. It will be interesting to see who the Bank of England reaches out to for this informative forum of how to successfully operate a decentralised crypto currency (or correctly put, digital currency) when control and centralisation is key to an organisations raison d’etre.
Prime Minister Rishi Sunak asked the Bank of England to look into backing a currency, in 2021, as chancellor, however it was quietly put on the back burner after the melt down of Crypto currencies in 2022.
While in October 2022, Mr Sunak’s Financial Service Minister Andrew Griffith warned a lengthy delay could create problems for the economy. Indeed, this will no doubt go down as a lost opportunity for the UK to set out a vision of how the UK can compete in a digitalised world economy.
Other, bigger blocs, such as the USA and the Eurozone also want their digital dollars and digital euros to be international means of exchange. That is less of an explicit aim here by the UK Treasury.
The eye here by the UK Government is on maintaining UK monetary sovereignty against upheaval from the likes of Big Tech, meaning innovation will ultimately be left to the myriad of both new and relatively established companies already active in the UK to set the trend!