Retail CBDCs in the UK: “Welcomed” by CryptoUK and R3, but “Dystopian” for ETC Group
“At this stage, we judge it likely that the digital pound will be needed in the future. It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified”, said the BoE and HM Treasury.
The Bank of England and HM Treasury published a Consultation Paper that sets out their assessment of the case for a retail central bank digital currency (CBDC) – a so-called ‘digital pound’.
The digital pound would be a new form of sterling, similar to a digital banknote, issued by the Bank of England. It would be used by households and businesses for their everyday payments needs. It would be used in-store, online and to make payments to family and friends. If introduced, it would exist alongside, and be easily exchangeable with, cash and bank deposits.
The digital pound would maintain public access to retail central bank money and, as our lifestyles and the economy become ever more digital, it would also promote innovation, choice and efficiency in domestic payments.
“At this stage, we judge it likely that the digital pound will be needed in the future. It is too early to decide whether to introduce the digital pound, but we are convinced preparatory work is justified”, said the official announcement.
Following the joint announcement from Bank of England and HMT on the consultation ‘The digital pound: a new form of money for households and businesses’, a number of crypto asset organizations have come forward to comment on the matter.
Ian Taylor, Board Advisor at trade association CryptoUK, said: “We welcome today’s news that the Bank of England and His Majesty’s Treasury has announced a roadmap to a digital pound. This will bring the UK in line with the European Central Bank and a growing number of forward-thinking nations including many G7 countries, which are exploring the benefits of this payment instrument.
“We look forward to discussing the positive impact a UK central bank digital currency (CBDC) could have on financial inclusion, stability and operational efficiency in an increasingly cashless society with policymakers and regulators. We will also look for opportunities to collaborate with other associations here in the UK and globally, and connect with other jurisdictions in the process of developing and implementing their own CBDC solutions.”
Bradley Duke, co-CEO at ETC Group, stated: “Crypto and Central Bank Digital Currencies are completely different animals, but they are often lumped together because they both use blockchain technology. CBDCs such as the Digital Pound will likely be completely centralised and possibly dystopian in nature, while leading cryptocurrencies such as Bitcoin and Ethereum envisage a freer world filled with innovation and opportunity.”
Chris Ford, Head of Government Affairs EMEA at enterprise blockchain firm R3, said: “The Treasury’s plan to investigate the design of a digital pound is a significant moment for our cutting edge fintech sector and demonstrates the UK government’s serious intent about putting technology at the heart of our financial services industry. Regulated CBDC, built on distributed ledger technology, can enhance efficiency across our financial market infrastructure and solve real problems that have held us back for decades.
“Following last week’s proposals to regulate crypto assets, it is clear that the government sees DLT as a core pillar through which it can drive financial innovation. Amidst rising competition from Europe and elsewhere, the application of blockchain and related technologies will be key in ensuring the UK retains its status as a global hub for financial services.”