TORY Chancellor Rishi Sunak wants to introduce a digital currency dubbed "Britcoin", it has been reported.
Back in April, when the cryptocurrency Bitcoin hit its peak price of just over £46,000 per coin, the Treasury chief told the Bank of England (BoE) to look into introducing a central bank-backed digital currency.
Sunak (below) launched a BoE-Treasury taskforce to investigate the idea of a digital version of sterling in April this year which is expected to report its findings to the Chancellor by the end of 2021.
The BoE-backed digital version of sterling would allow people to hold accounts directly with the central bank and insiders at the Treasury told the Mail on Sunday that it would be the biggest upheaval in the monetary system for centuries.
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The central bank digital currency (CBDC) would be a direct digital equivalent to physical cash and its supporters say it could cut banking costs for small businesses, as well as cutting the time it takes to make payments online.
However, there are also fears that it could lead to greater financial instability, make it harder to regulate the economy and lead to higher borrowing rates due to the CBDC eating into money available for high street banks to lend to borrowers.
It is understood the Treasury is keener than BoE on the idea of creating a "Britcoin" due to the sporadic nature of the value of cryptocurrencies.
Bitcoin quadrupled in value from November 2020 to April of 2021 before halving in price from May to June. It now sits at almost £26,000 per coin after hitting a peak of just over £46,000 per coin in mid-April.
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It is not just the UK looking into launching a CBDC, other countries are also looking into the idea. Allowing citizens access to a CBDC would give more people the ability to take advantage of central bank funds, which only commercial banks can use at present.
China is a front-runner to launch a CBDC. The European Central Bank is also looking into it, but any launch is still several years away.
Britcoin? #UKFW21 https://t.co/Slk5lwUvrV
— Rishi Sunak (@RishiSunak) April 19, 2021
"The Government and the Bank of England have not yet made a decision on whether to introduce a CBDC in the UK, and will engage widely with stakeholders on the benefits, risks and practicalities of doing so," the BoE said.
BoE governor Andrew Bailey has previously said Bitcoin fails to act as a stable store of value or an efficient way to make transactions, making it ill-suited to serve as a currency and a risky bet for investors.
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