Shoppers could soon be paying for goods with a new state-backed digital currency as the Treasury and the Bank of England launch a ‘central bank digital currency’ (CBDC) taskforce.
The taskforce, set up by Chancellor Rishi Sunak this week, will explore the launch of a new “Britcoin” digital currency, underpinned by the same blockchain technology used by currencies like Bitcoin and Etherium.
However, unlike Bitcoin and other popular cryptocurrencies which are prone to wild fluctuations in value, Britcoin would be tied to the pound sterling and always be worth the same as the equivalent in physical cash.
According to the Bank of England, Britcoin would “be introduced alongside – rather than replacing – cash and bank deposits”.
Britcoin could potentially help make payments safer and dramatically quicker than current digital infrastructure, which can often take days to reach retailers despite it seeming instant to customers.
A state-backed “stablecoin” like Britcoin would allow businesses and consumers to hold accounts directly with the Bank of England and avoid lenders entirely.
While UK banks have until now taken a cautious approach to digital currencies, other countries like China are understood to be working on their own state-backed stablecoins set to be launched over the next few years.
The dramatic rise in popularity of digital currencies like Bitcoin, which hit record highs of $56,000 recently, has also led many to speculate that private companies could launch a country-wide stablecoin before the banks could.
“We’re launching a new taskforce between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency (CBDC),” Sunak said.
Last month John Howells, head of the UK’s largest cash machine network Link, predicted that a new digital version of the pound sterling will be introduced by the country’s central banks over the next few years.
This will usher in a decade in which both physical cash and digital currency will be largely interchangeable, before cash eventually disappears.
Howells said. “The shift will be accompanied by a massive Government education push similar to the move from shillings and pence during decimalisation in the 1970s, or the switch to digital television during the 2000s analogue switch-off.”