Following on from China’s successful pilots for a digital yuan, the UK chancellor Rishi Sunak has announced a task force to explore the feasibility of a UK Central Bank Digital Currency (CBDC).
The Bank of England and HM Treasury have joined forces to pool their resources into exploring the advantages and risks of a national digital currency. The task force will be led by the deputy governor for financial stability, Jon Cunliffe, together with Katharine Braddick, the treasury’s director general of financial services.
Now that the UK has more regulatory freedom following Brexit, Sunak has said that he wants the UK to “be at the forefront of innovation”. He also wants to demonstrate that the City can keep its position as the global financial centre.
“Our vision is for a more open, greener, and more technologically advanced financial services sector,” said Rishi Sunak. “The steps I’ve outlined today, to boost growing fintechs, 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 U.K.’s position as the world’s pre-eminent financial centre.”
Given the storm of interest over Bitcoin and Cryptocurrencies during the last few months, the viability of CBDCs have come to the forefront of financial policy.
It appears that thus far no decision has been made, but that it is envisaged that a digital currency would be issued, and that it would exist alongside cash and all other forms of the currency rather than replacing them.
It would also appear that a UK digital currency is still some way off. The task force will need to survey stakeholders and to detail a plan of how the new digital currency will enter the existing financial system. Also, how it will be used and how this will affect stability overall.
Other countries such as China, Japan and Turkey are at various stages in their development of a CBDC. China could well be the first country to implement a digital currency as pilot trials have already been quite extensive.
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