Plans are underway in the United Kingdom to create a digital pound that would offer a stable alternative to bitcoin or ether. The Bank of England is leading the charge on this project, with the hope of issuing the digital pound by the end of 2018.
The central bank and the UK Treasury announced on Monday that an official digital currency is “likely to be needed in the future.” They added that the government is currently exploring the possibility of issuing a digital currency and that there are many benefits to doing so. Among these benefits are increased efficiency and reduced costs.
Could a digital pound be the new way to pay? This is something that UK finance minister Jeremy Hunt is exploring, as he believes that it would be a more trusted, accessible and easy way to use money. However, ensuring the financial stability of the country is always a top priority.
The Bank of England and the Treasury are considering launching a digital pound, nicknamed “Britcoin,” in the next few years.
Central banks around the world are considering issuing their own digital currencies. Unlike cryptocurrencies that are currently available, these coins would have official backing, which would result in a stable value and mean they could be used for everyday spending.
In the United Kingdom, £10 of a digital pound would be worth £10 in cash. The Bank of England would provide the foundational public infrastructure — or a “core ledger” — while private companies would issue digital wallets that could be accessed via smartphones or smartcards. This would allow people to use their phones or smartcards to pay for goods and services, without having to carry any cash around with them.
Central bank digital currencies could make online spending more convenient, increase cross-border transactions and boost competition among providers of digital financial assets.
What if there was no digital pound? In a speech in November, Sir Jon Cunliffe, deputy governor of the Bank of England for financial stability, said that without a digital pound, a few big players could “dominate and perhaps control innovation in payment services.” This could have a negative impact on the economy, as it would be harder for new businesses to enter the market.