National Post (Latest Edition)

Bank of England talks of ‘Britcoin’ digital currency

Central bankers warming to electronic cash

- HUW JONES AND DAVID MILLIKEN

• British finance minister Rishi Sunak told the Bank of England on Monday to look at the case for a new “Britcoin,” or central bank-backed digital currency, aimed at tackling some of the challenges posed by cryptocurr­encies such as Bitcoin.

A Boe-backed digital version of sterling would potentiall­y allow businesses and consumers to hold accounts directly with the bank and to sidestep others when making payments, upending the lenders’ role in the financial system.

“We’re launching a new task force between the Treasury and the Bank of England to co-ordinate explorator­y work on a potential central bank digital currency (CBDC),” Sunak told a financial industry conference.

Soon after, Sunak tweeted the single word “Britcoin” in reply to the finance ministry’s announceme­nt of the task force.

Other central banks are also looking at whether to set up digital versions of their own currencies, essentiall­y widening access to central bank funds which only commercial banks can use at present. This could speed up domestic and foreign payments and reduce financial stability risks.

China is a front-runner to launch a CBDC. Last week the European Central Bank said it was studying an electronic form of cash to complement banknotes and coins but any launch was still several years away.

The BOE said a digital version of sterling would not replace either physical cash or existing bank accounts.

“The Government and the Bank of England have not yet made a decision on whether to introduce a CBDC in the U.K., and will engage widely with stakeholde­rs on the benefits, risks and practicali­ties of doing so,” the BOE said.

BOE Governor Andrew Bailey has previously said Bitcoin, the best known cryptocurr­ency, fails to act as a stable store of value or an efficient way to make transactio­ns, making it ill-suited to serve as a currency and a risky bet for investors.

Central banks also took a dim view of efforts by Facebook to set up its own digital currency.

Even so, cryptocurr­encies have received growing interest from mainstream financial institutio­ns, and Bitcoin hit a record high of nearly US$65,000 on April 14, up tenfold in the space of a year.

Sunak, launching the U.K. Fintech Week conference, also announced other measures aimed at maintainin­g the post-brexit competitiv­eness of London, which vies with New York.

Since Britain’s departure from the European Union’s orbit on Dec. 31, the financial sector has faced restrictio­ns on serving EU customers.

Sunak proposed removing restrictio­ns inherited from the EU, including on who can trade shares in London and the double volume cap.

This would help Britain attract more “dark” or anonymous trading by big investors after Amsterdam toppled London as Europe’s top share trading centre in January.

Newspapers in English

Newspapers from Canada