A consultation paper by the Bank of England and the Treasury has expressed the UK's intention to launch its own digital currency by 2025. The purpose of this step is to ensure that the country does not fall behind in the field of technology in the context of the active development of cryptocurrencies around the world.
It is noted that the expansion of the use of digital currencies may cause a split in the monetary system of England, which may undermine the stability of the British economy and limit the Bank of England's ability to implement monetary policy.
In this regard, the state plans to issue its own digital currency, which will be deliberately called Britcoin. The move aims to increase competition in the digital payments industry and to keep sterling as the UK's main currency. It is also envisaged that Britcoin will become a “bridging asset” between the British pound and other cryptocurrencies not related to sterling.
The value of any UK digital currency will be pegged to the value of the British pound in transactions that will be controlled by the Bank of England. On the other hand, £10 in cash can be exchanged for £10 digitally.
Transactions will be conducted through anonymous smartphone wallets, providing a level of privacy similar to that offered by other cryptocurrencies. This will contribute to a high level of public confidence in the digital pound.
"We will always ensure that people's privacy is a high priority in any design and any implementation will be alongside, not in place of, traditional cash," emphasized Bim Afolami, Economic Secretary at the Ministry of Finance.
The Treasury and the Bank of England are currently developing the look and feel of the UK digital pound. Progress on its implementation is not expected in the near future, according to the report, it could take several years.
The future design stage is aimed at deeply exploring the capabilities of “Britcoin” and its potential to facilitate and innovate daily financial transactions for individuals and companies.
The final decision on the creation of this digital currency by the Central Bank (CB) will be made after the completion of this phase.
