Digital CurrencyNews

Bank Of England Explore Plans For A Digital Currency

Bank of England

Digital currencies and cryptocurrencies such as Bitcoin have certainly captured the public imagination in recent years. Initially reserved for the most tech-savvy consumers, now people from all walks of life are familiar with digital money, and many may even have made a crypto investment themselves.

No surprise, then, that the government are keen to consider what role digital currencies have to play in the British economy. After all, most of us are already doing the bulk of our banking through our smartphones – so it may not seem like too much of a stretch to bring the whole system online.

We’re still a long way off from any of this coming to fruition, however chancellor Rishi Sunak has now launched a taskforce to investigate the possibilities and share possible pros and cons. There will be a lot of work to be done considering the possible impact on businesses and government bodies as well as consumers.

If the government did decide to issue a digital currency, then it would be what’s known as a ‘central bank digital currency’ (CBDC). This is different to cryptocurrencies like Bitcoin because it’s backed by the state – in this case, the currency would be issued directly by the Bank of England.

What has the bank said about the move?

In many ways, it’s all still speculation at this point – but the Bank of England has commented on what a CBDC may look like for Britain. They said:

“If a CBDC were to be introduced, it would be denominated in pounds sterling, just like banknotes, so £10 of CBDC would always be worth the same as a £10 note.”

“CBDC is sometimes thought of as equivalent to a digital banknote, although in some respects it may have as much in common with a bank deposit. Any CBDC would be introduced alongside – rather than replacing – cash and bank deposits.”

How would it affect my finances?

In truth, it probably wouldn’t affect the average person much at all. While the technology behind your payments and transactions might change, the day-to-day business of storing and spending digital currency would be much the same as our current system. And, as the bank has said that it wouldn’t be intended to replace cash or bank deposits, those who prefer to do things the traditional way shouldn’t see too much of a change either.

However it could prove to be important for the British economy, helping us to show that we can modernise and become part of the digital finance revolution. There is already speculation that one reason for the bank to consider digital currency is so that it can avoid competition from independent crypto.

It will be very interesting to see how this develops – but don’t expect to be loading up a digital wallet any time soon. There is no clear timeline, but we would expect something this complex to take years to come to fruition. In the meantime, we’ll be sure to share updates as the way that we use money transforms for the digital age.

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