WORLD NEWS | British Currency?UK getting closer to launching digital currency

LONDON, Feb. 7 (AP) Britcoin is getting closer to reality.

British businesses and consumers may need a digital version of the pound, British authorities said on Monday, formally seeking public comment on the idea of ​​introducing a central bank digital currency.

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Britain, home to the world’s second-largest financial center, lags behind former colonies such as Nigeria, the Bahamas and Jamaica in launching digital currencies.

According to consultant PwC, more than 80% of central banks around the world are considering launching digital currencies or have already done so.

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Treasurer Jeremy Hunt said in a statement: “While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new payment method that is trustworthy, accessible and easy to use.”

“That’s why we investigate what might have happened first, while always making sure we protect financial stability.”

The public outcry comes almost two years after the Treasury and the Bank of England said they were considering introducing a digital currency.

While U.K. Prime Minister Rishi Sunak suggested naming the scheme “Britcoin” when he was finance minister, the Bank of England has stressed that the potential currency should not be confused with cryptocurrencies such as bitcoin.

Backed by the central bank, the new currency will be “reliable and retain its value over time,” the Bank of England said on its website, in contrast to cryptocurrencies, which can fluctuate wildly and threaten investors’ holdings.

The industry has been particularly volatile in recent months, with calls for greater regulation growing. Last year’s cryptocurrency crash sent assets plunging, while the multibillion-dollar collapse and bankruptcy of cryptocurrency exchange FTX in November sparked fraud charges against founder Sam Bankman-Fried.

The bank said the proposed digital currency would be denominated in British pounds, with a £10 digital currency always equal to a £10 note. This currency is held in digital wallets and can be used to pay for goods and services electronically.

Proponents of central bank digital currencies say they make digital transactions easier and cheaper and expand access to the financial system because they can be used by the unbanked.

This is one of the reasons why the Bahamas will be the first country to introduce a digital currency in 2020. Nigeria and Jamaica followed suit, and pilot projects are underway in China and more than 20 other countries. The United States and the European Union are considering introducing digital currencies.

But digital currencies also carry risks, including cyberattacks, privacy concerns and the danger that they could be exploited by criminals.

Critics argue that since funds invested in central bank digital currencies are safer than bank deposits, they could also siphon savings from commercial banks and weaken the financial system.

Former Bank of England Governor Mervyn King, now a member of the House of Lords, said recently that a digital pound would have “risks but no clear benefits”.

While such a digital currency might be useful in a country without an effective banking system, that is not the case in the UK, he said.

“The government has said it wants the UK to be at the forefront of innovation, crypto assets and fintech, but we need to be selective and not be driven by false enthusiasm for all things crypto,” King said. (Associated Press)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)