Cryptocurrency: Expert on how financial system is being ‘remade’
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The Chancellor is understood to be pushing a major upheaval of the monetary system in the UK, with a digital version of the pound or so-called “Britcoin” being considered. In April, Mr Sunak launched a task force to look at ways to boost the City with the use of innovation and technology at the forefront.
The blurry world of cryptocurrencies, including Bitcoin, has gained huge traction in recent years.
Countries around the world, including China, have begun testing a state-backed versions of the electronic legal tender.
But unlike the volatile cryptocurrency markets there would be increased regulation and be linked to central banks.
Sunak plans to rival cash with official digital currency – do you agree? (Image: GETTY)
Rishi Sunak has set up a taskforce (Image: GETTY)
Treasury insiders believe a digital currency could provide the UK economy a much-needed boost in the wake of the global financial crisis.
The use of cash has dramatically decreased in recent years and the decline has been accelerated during the pandemic as people were encouraged to use their cards to purchase goods.
A digital currency could also provide another way to stimulate the economy to traditional avenues such as quantitative easing.
The method of pumping large sums of money into the economy often drives up inflation and the cost of living.
A new digital currency could be created in the UK (Image: GETTY)
It is thought “Britcoins” could be paid directly into people’s bank accounts and help to speed up transactions across the board.
Some argue it could also reduce banking costs for UK firms.
But others fear an ever-growing digital economy could make financial markets unstable and drive up loan and mortgage rates.
Each digital coin would also be unique and could potentially throw up questions over privacy and state control.
The current use of cryptocurrencies by traders has also thrown up environmental issues as the electronic mining of coins uses a large amount of energy.
Rishi Sunak wants the UK to embrace fintech (Image: GETTY)
Almost 90 percent of the world’s central banks have launched exploratory projects into an e-currency, according to the Bank for International Settlements.
China has started testing a digital yuan, while Sweden has the “e-krona” and the Bahamas’ “Sand Dollar”.
The Treasury is currently working alongside the Bank of England to explore the benefits of Fintech – including “Britcoin”.
It is being led by the bank’s deputy governor for financial stability, Jon Cunliffe, and the Treasury’s director general of financial services Katharine Braddick.
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The Bank of England is working closely with the Treasury on new technologies (Image: GETTY)
A report is expected to be published by the end of the year.
Speaking in April, Mr Sunak said: “Our vision is for a more open, greener, and more technologically advanced financial services sector.
“The UK is already known for being at the forefront of innovation, but we need to go further.
“The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward.
“And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.”