Bank backs ‘Britcoin’ in spite of crypto crash

THE Bank of England is to press on with proposals for a digital version of the pound despite collapsing cryptocurrency prices and fears it could cause bank runs.

Plans unveiled by the Treasury yesterday show that a delayed consultation on launching an official sterling-linked cryptocurrency, colloquially dubbed “Britcoin”, is going ahead.

Rishi Sunak first unveiled an ambition to launch a central bank digital currency in summer 2021 when he was chancellor. But doubts over the project have grown after high-profile crises in the cryptocurrency market this year.

Bitcoin has declined 60pc since January and several cryptocurrency businesses have collapsed, taking customer and investor money with them.

The most high-profile failure has been FTX, a Bahamas-based exchange that filed for bankruptcy protection last month owing customers and creditors billions of dollars.

Despite market turmoil, officials think a Britcoin could reduce the cost and time of digital payments. When Mr Sunak announced the project last year, he said a digital pound would help “cement the UK’S position as the world’s pre-eminent financial centre.”

Critics worry that Britcoin could undermine commercial banks by making it easier for a run on the bank.

The Treasury said Britain must embrace the technologies of the future, including a digital pound. Sources told The Daily Telegraph that the planned public consultation will take place early next year. The Bank of England declined to comment.

Carol Alexander, a professor of finance, said the technical work involved meant it could take five years for a digital pound to become reality.