The British government is looking into the potential of developing a new digital currency, which the Treasury Chief Rishi Sunak has dubbed “Britcoin.”
Cash payments are on the decline due to the coronavirus pandemic. As a result, the Bank of England and the Treasury have agreed to collaborate to examine the advantages of a central bank’s digital currency.
According to the bank, if the new currency comes to fruition, it will be a new type of digital money for consumers and businesses to use instead of replacing them. It will exist alongside cash and bank savings.
The popularity of Bitcoin and other so-called cryptocurrencies has inspired many digital currencies that are only available digitally or electronically. Digital currencies, such as the one under consideration in the UK, vary from Bitcoin since the state authorities provide them.
The app-based Starling Bank founder and CEO, Anne Boden, said that “the world is heading towards digital currencies, and we will need to find a way for them.”
By the end of this decade, only one of ten payments in the UK is to be made with traditional paper money. And if cash transactions continue to decline in the years ahead, one of the advantages of a digital currency would be a backup to card payments. Digital currency proponents also believe that they can give a new platform for people to make online transactions.
Only the Bahamas and China have such a currency at the moment, with China testing their money in a few towns. Sweden has stated that it plans to build its digital currency by 2026, and the European Central Bank has noted that they are planning to create a digital euro in 4 years.
The new British task force is one of a slew of initiatives aimed at boosting the UK’s financial technology sector, according to Treasury Secretary Sunak. He addressed a fintech conference, “Our aim is for a more open, greener, and technologically advanced financial sector.” He added, “We’ll consolidate the UK’s place as the world’s top financial center if we can harness technology’s incredible potential.”