The Bank of England and the King’s Treasury recently announced that will most likely need to create the CBDC of UK by 2030. The U.K. Ministry of Finance will initiate the creation of its digital currency.
The U.K.’s CBDC
According to a report in the Telegraph, one of England’s leading editorials, the process of creating the U.K.-branded digital currency could start as early as next week.
Governor Andrew Bailey and Finance Minister Jeremy Hunt noted:
“Based on the work to date, the Bank of England and HM Treasury believe it is likely that a digital pound will be needed in the future.”
The Digital Pound project is named “Britcoin,” and as early as next week it could come to life. Just a few days ago, the U.K. Ministry of Economy and Finance posted an ad on Linkedin, where they seek an open position for a “Head of Central Bank Digital Currency.” A job, citing the ad description, that is important, complex and cross-cutting.
There had already been much talk that the UK, along with other countries, was planning to create its own Central Bank Digital Currency (CBDC). At this time, however, the intention of the British Central Bank and Her Majesty’s Treasury, seem to have materialized.
How might the UK’s digital currency work?
In the past few years, the UK has experienced a 35 percent decline in cash payments. Statistical data explained that only one in six payments is made in cash, and all other transactions are made by debit or credit card.
CBDC is a different currency from cryptocurrency because it is issued by the Central Bank. If the UK were to issue its own digital currency, it would be more reliable than a cryptocurrency, maintaining its value over time.
The United Kingdom issuing a digital currency would equal the denomination of pounds. Citizens would be able to pay for anything digitally. Although the CBDC is regarded as a digital banknote, it has many traits in common with a bank deposit.
So, the UK is considering the creation of its own CBDC because it is adapting to the way people pay. Financial technology companies are increasingly offering new forms of money and new ways to pay. The changes mean new opportunities and risks that must be planned perfectly for innovative growth.
The Bank of England will introduce a new CBDC, to look further ahead, to give the UK a chance to grow financially.
Currently, a task force has been created for the CBDC project. The Central Bank has relied on HM Treasury (HMT) to oversee the project, while also working closely with public authorities.
Nations vying for their own digital currency (CBDC)
There are many states considering, or even implementing, the idea of a CBDC.
A report by the Bank of International Settlement (BIS), showed that about 80 percent of banks around the world are planning to create their own digital currency.
But not only that, the same report highlighted that 40 percent of nations around the world are already in the experimental stage.
Among the various projects, one of the most ambitious is that of the Japanese Central Bank (BoJ), which has already announced its plan for experimentation, which will begin this spring and will involve consumers and private sector companies.
Also worth mentioning is the even-more initiated project of Turkey, which carried out the first tests of its Digital Lira in early January.
The data show us that countries with a developing economy are the most likely to start projects quickly, while European and Central American countries seem to be going more cautiously.
The reasons why are clear-a digital currency would promote the inclusion of a large part of the population in the financial world. Also, cash is slowly disappearing and digital payments are going through private systems, a digital currency would make this transition obsolete.
Despite the fact that the analysis shows precisely that the countries most prone to CBDCs are those with a developing economy, the UK is ready to change its financial resources.