Written by: Konstantin Anissimov, Executive Director of CEX.IO
Central bank digital currencies (CBDCs) have become the focus of many governments, as their integration can fundamentally change existing payment ecosystems around the world.
CBDCs are managed by the respective federal banks and so far only five countries have deployed their versions of these digital currencies, while another fourteen are running pilot programs.
In April 2021, Rishi Sunak, Chancellor of the Exchequer announced the launch of a task force between the UK central bank and the Treasury to explore the benefits, practicalities and risks of deploying a CBDC. While the CBDC has been dubbed ‘Britcoin’ by the public, the name is unlikely to hold true if the UK does indeed launch a CBDC.
To successfully launch Britcoin, new government financial policies, regulations, and supporting technologies would have to be developed – far from easy. Andrew Bailey, the Governor of the Bank of England is not a strong supporter of Bitcoin as he believes the crypto token has no real value.
CBDCs, meanwhile, have several potential benefits that could revolutionize the payment system not only in the UK but around the world. This is why 81 countries are now considering the possibility of launching a CBDC. At the moment, the Bank of England does not issue digital currency, only banknotes.
The launch of a digital pound with a stable store of value will allow the public to transact using a digital form of the pound sterling. Right now, when you pay with a card or a payment processing platform like Google Pay or Amazon Pay, you’re essentially sending money from one bank account to another.
TThe potential benefits of a CBDC in the UK
The UK is not the first country to attempt the research and development of a CBDC, but it is not something easy to do, and many countries are moving cautiously on this issue, especially those in the United Kingdom. ‘Europe. The UK has an advantage here because of its greater flexibility in its legislation.
The launch of Britcoin could have several benefits for the public. The working group is currently exploring all possibilities. They must determine all the impacts of the introduction of a CBDC and its potential popularity, in order to avoid a situation similar to that of El Salvador.
The first benefit that comes to mind is the reduction in costs for businesses, especially credit card transactions. Because an eBook is written in code, you can attach terms to a payment in the form of a smart contract. You can send money to your child as long as the money cannot be spent on chocolate.
Likewise, a transaction could be scheduled to execute when a certain condition is met, for example, when a sale is made. Automated payments, reduced transaction fees, programmable payments, fast payment execution and a solution for the unbanked are some of the potential benefits of incorporating a CBDC in the UK. United.
While it is difficult for lawmakers to determine the potential popularity of a CBDC when it is introduced, the many benefits it could bring will likely make it well accepted.
The CBDC will strengthen the UK’s place in the global financial arena
Using a CBDC would allow the UK to reduce the risk of financial crimes, as well as improve the speed and costs of settling transactions. It would also open up many possibilities for boosting the country’s macroeconomic management. That said, maintaining a respectable distance while monitoring the financial activities of the public seems like a good idea.
The introduction of any new form of technology has its pros and cons, and invasion of privacy is something no one wants. At present, China is on its way to becoming a potential world leader in CBDC technology and is far ahead in the global race to determine the future of silver.
The United States is far behind, and as a global leader in traditional finance, the country could be far behind in the digital economy race if China continues to make giant strides. It is clear that Asian countries will seek advice from China. The UK is likely to be a leader in Europe along with Sweden.
Several countries are currently ahead of the UK in their quest to implement CBDCs, but European countries are likely to look to the UK for advice and financial infrastructure. Since the United States and China are ranked first and second in terms of GDP, respectively, the United States is more likely to collaborate with the United Kingdom.
Having said that, I believe the UK will slow down and monitor the impacts of CBDCs globally before taking action to implement a CBDC. China is making great strides towards implementing its CBDC technology at scale and the UK could follow suit if China succeeds.
To conclude, it’s clear to everyone now that digital currencies are here to stay. London is one of the most successful financial centers in the world, which is why the Bank of England and the British Treasury are well positioned to take a step towards the adoption of Britcoin.
If done correctly, this move will contribute to the country’s prosperity, potentially making the UK a world leader in the CBDC only behind China. The importance of CBDC technology is visible to all, but only those who take active steps towards its implementation will be considered global leaders in financial infrastructure in the near future.
The UK has the tools to make it work – all it needs now is deep application and public support.
The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading crypto-assets carries a risk of financial loss.
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