Britcoin! UK plots new digital currency 'tied to value of the pound' – phasing cash out

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Britcoin! UK plots new digital currency 'tied to value of the pound' – phasing cash out

Japan's largest bank developing new digital currencyA financial analyst hailed the news as proof that cash was “going the way of the dodo”. The Ban

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Japan’s largest bank developing new digital currency

A financial analyst hailed the news as proof that cash was “going the way of the dodo”. The Bank of England and the Treasury will jointly look at the possibility of the objectives of establishing a central bank digital currency, in terms of both the risks and the benefits.

It is a step along the path of creating an e-pound, a sort of digital banknote.

Jeremy Thomson-Cook, Chief Economist at international business payments specialist Equals Money, said: “This ‘Britcoin’ would be tied to the value of the pound to eliminate holding it as an asset from to derive profit.

“There could be an economic impact in the form of wider investment into the UK tech sector and lower transaction costs for international businesses.”

He added: “I think this legitimises the belief that cash is going the way of the dodo and that the wider payments landscape will be entirely online within the next decade apart from incidentals or quixotic spending.

Chancellor Rishi Sunak

Chancellor Rishi Sunak has launched a taskforce to examine the feasibility of the idea (Image: GETTY)

Pound Sterling

Cash is “heading the way of the dodo”, suggested Jeremy Thomson-Cook (Image: GETTY)

“Systems are rapidly changing to make the spending and receiving of money – and the reporting thereof – easier.

“Working with a fintech company on anything from expense management to domestic and international payment eases the time and cost burden on businesses who are looking to get on post-Covid.”

Authorities have emphasised they remain committed to supplying cash to those who need it.

Digital currencies are already being explored or even implemented in several other countries.

Such a move bring benefits in the way cross-border payments are made, as well as take advantage of a general decline in cash payments.

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Andrew Bailey

Andrew Bailey, Governor of the Bank of England (Image: GETTY)

Currently, the only country to have a fully functioning digital currency is the Bahamas such a currency, although China is trialling it in several cities.

Earlier this week, Stefan Nils Magnus Ingves, the CEO of Sweden’s central bank, said the country could have such a digital version of its currency up and running in 2026, while Christine Lagarde, the President of the European Central Bank (ECB) has indicated an electronic euro might be created within four years.

The idea of a central bank digital currency draws inspiration from Bitcoin and other cryptocurrencies, without itself being a cryptocurrency.

One of the benefits of an e-pound would be as a backup to card payments.

At present, customers can turn to cash as an alternative if they are in a shop where the card machines have stopped working.

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Christine Lagarde

Christine Lagarde, President of the European Central Bank (Image: GETTY)

Bitcoin

Bitcoin, Litcoin and Ripple are commonly known as cryptocurrencies (Image: GETTY)

However, as cash use is becoming increasingly uncommon, with fewer than one in 10 payments in the UK are expected to be made with paper money by 2028, its place as a contingency to electronic payment systems will decline.

A digital currency could be another contingency system, according to a Bank of England report from last year.

It would also provide another way to pay online, where cash cannot be used.

A digital currency could also be designed to enable tax payments to be made automatically at the point of sale, or in electricity meters which automatically pay suppliers based on power usage.

EU budget factions mapped

EU budget factions mapped (Image: Express)

Additionally, it could also make it easier to pay a few pence to read an individual article on a newspaper website, rather than having to sign up to a monthly subscription.

The task force is part of a series of measures that Chancellor Rishi Sunak hopes will help the UK’s financial technology sector.

The Financial Conduct Authority (FCA) will set up a so-called scale box supporting companies trying to scale up innovative technology.

The authority already runs a regulatory sandbox that allows companies to test innovations in the market, on real consumers.

Cash machines

Cash machines are likely to become increasingly scarce (Image: GETTY)

The Chancellor is also committed to consulting on proposals from a review into how companies list their shares on a public market in the UK.

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.”



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