Chancellor of the Tory Party, Rishi Sunak, plans to introduces a new digital currency to the United Kingdom after Bitcoin hit its peak price earlier this year. Back in April, the extremely popular cryptocurrency Bitcoin hit its all-time peak price of just over £46,000 per coin. Following this, the Treasury chief told the Bank of England to look into introducing a central bank-backed digital currency.
The introduction of Britcoin
Shortly after, Sunak launched a Bank of England Treasury taskforce to look further into the idea of introducing a digital version of sterling. If the investigation goes according to plan, the new cryptocurrency is expected to report its findings to the Chancellor by the end of 2021.
The Bank of England also backed this digital version of sterling as it would allow people to hold accounts directly with the central bank. The central bank digital currency (CBDC) would be a direct digital equivalent to physical cash, and it is believed that Britcoin has the potential to be the biggest upheaval in the UK monetary system for centuries. It is also said that the currency could cut banking costs for small businesses, as well as cutting the time it takes to make payments online.
Concerns around the currency
However, there are also concerns that the digital currency could lead to greater financial instability in the country. It is said that Britcoin could make it harder to regulate the economy and could lead to higher borrowing rates. This is due to the CBDC eating into money that is available for high street banks to lend to borrowers. It is understood that the Treasury is more eager than BoE on the idea of creating a Britcoin due to the sporadic nature of the value of cryptocurrencies. Therefore, plans to introduce the digital currency will be watched closely by all.
