Bank of England to consider the case for a ‘Britcoin’
By Dan Moore
11:37, 20 April 2021
Chancellor of the Exchequer Rishi Sunak has charged the Bank of England with investigating the potential of a central bank-backed digital currency.
If it gets the go-ahead, the new digital alternative to sterling would enable households and businesses to make direct electronic from accounts that cater specifically for the Britcoin.
To coin a phrase
Rishi Sunak revealed the establishment of a new taskforce between the Treasury and the BoE while speaking at a virtual financial industry conference on Monday, and followed up the announcement by tweeting the word 'Britcoin'.
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Britcoin denominations
The BoE confirmed that if a central bank-backed digital currency were introduced, transactions would be made in the same denominations as pounds sterling, meaning a Britcoin £10 would be worth the same as a physical £10 note.
In a statement the BoE confirmed any digital currency it introduced would run alongside cash and bank deposits, rather than replace them.
Britcoin would not be a cryptocurrency
The Bank of England has stated any central bank-backed digital currency it oversaw would be ‘fundamentally different to cryptocurrencies or cryptoassets’. Cryptoassets are different as they are not issued by a central bank. Instead, they are privately issued.
This is a key factor for the BoE, which stated: “Our Financial Policy Committee has assessed cryptoassets and concluded that they do not currently pose a risk to monetary or financial stability in the UK.
“However, cryptoassets do pose risks to investors and anyone buying cryptoassets should be prepared to lose all their money.”
Key aims of new digital currency taskforce
Four key aims lie at the centre of the Treasury and BoE Central Bank Digital Currency (CBDC) Taskforce. These are to:
- Coordinate exploration of the objectives, use cases, opportunities and risks of a potential UK CBDC.
- Guide evaluation of the design features a CBDC must display to achieve our goals.
- Support a rigorous, coherent and comprehensive assessment of the overall case for a UK CBDC.
- Monitor international CBDC developments to ensure the UK remains at the forefront of global innovation.
