Britcoin Digital Pound decision due by 2025 | business news
A decision on whether to launch a so-called ‘Britcoin’ digital pound is set to be taken by 2025, the Treasury has announced, as a consultation paper has noted that one is ‘likely to be needed in the future’.
The creation of a digital form of currency has been the subject of a consultation paperpublished on Monday by the Treasury Department and the Bank of England with a decision on launching a digital pound set to be made around mid-decade.
The decision will largely depend on future developments in money and payment transactions, the Treasury said.
The public is now invited to give their opinion on the digital pound as part of the research and development work carried out by the bank.
A potential Britcoin would be issued by the Bank of England rather than the private sector, unlike other cryptocurrencies such as Bitcoin.
Also unlike crypto, the coin would have an intrinsic value associated with the pound.
The Treasury said the needs of vulnerable people are taken into account in the design process to ensure Britcoin is easy to use and both understood and trusted as a form of money.
Should a digital pound be launched, the Treasury said there would be a cap on the amount of Britcoin people can hold during an introductory period to strike a balance between encouraging usage and managing risk, the Treasury said.
Those risks include the potential for large and rapid bank deposit outflows into Britcoin, he added.
A digital pound would work like paper money in that it is issued and controlled by the Bank of England and would be interchangeable with cash and bank deposits.
Currently, digital money is only issued to banks and not to the general public, but with a digital currency, digital money can be sent without the need for a bank account.
Speaking on the Ian King live show in June 2021, the co-chair of the Bank and Treasury Taskforce Sir Jon Cunliffe said that using Britcoin could be a possibility cheaper and easier than card transactions.
“They offer the potential to reduce costs,” he told Ian King.
“I think right now the average cost of a credit card transaction is just over half a percent, but of course if you’re a small tea shop in Shoreham-on-Sea you’re going to be paying more than that in some cases, well over 1% for this transaction.
“So it might be cheaper, it might be more convenient. These new forms of money offer the possibility of making them more integrated with other things through their software. So one can imagine smart contracts where the money would be programmed in only to be released when something happened. For example, you could think of giving the kids pocket money but programming the money so it can’t be used for candy.”
Click here to subscribe to the Ian King Business Podcast wherever you get your podcasts
In response to the announcement, Shadow City Minister Tulip Siddiq said: “We fully support the work of the Bank of England exploring the potential benefits of a secure and stable central bank digital currency.”
“This is a welcome contrast to the Conservative government’s promotion of the crypto wild west, which has endangered the savings of millions of people,” she said.
“A Labor government would be serious about attracting FinTech companies to the UK, safely capitalizing on the potential of new technologies and our quest to make the UK the home start-up hub of the world.”