A digital pound may be issued in the UK as part of an effort to introduce better regulation to the cryptocurrency industry. Finance Minister Jeremy Hunt announced The government plans to launch an investigation into central bank digital currencies in the coming weeks.
Hunt said the UK’s financial regulatory framework “must support innovation and leadership” in emerging financial areas, including cryptocurrencies and digital assets.
“To ensure that the sector is ready to embrace and facilitate the adoption of cutting-edge technologies, the government will hold talks in the coming weeks and investigate the case of a central bank digital currency (the sovereign digital pound). , potential design.
Hunt said the Bank of England will also release a “technology working paper” containing technical considerations and the potential construction of the digital pound.
While exploring the digital pound, the government will also work to establish a safe regulatory environment for stablecoins. Stablecoins “could be used for payments,” Hunt said, adding that governments need to secure the necessary powers to bring more crypto activity into the country.
Additionally, the government will also expand the Financial Services and Markets Bill to allow registered investment managers to work with cryptocurrencies. This will allow the inclusion of a range of cryptocurrencies in portfolios of overseas funds managed in the UK. The change is expected to be implemented by the end of the year, Hunt said in his statement.
The statement further solidifies the Bank of England’s position on the importance of central bank digital currencies. Many officials at the Bank of England, led by Deputy Governor John Cunliffe, have been vocal about the need for a digital pound. Proponents of the CBDC argue that the digital pound will provide consumers and businesses with a form of cash that is backed by the central bank but can be used in digital transactions.
The Bank of England argued that the sharp decline in the use of cash had allowed money to be controlled by “private companies” without “government guarantees in paper money and coins”.
However, there are strong currents within the UK government against CBDC. The Economic Affairs Committee, a panel in the UK Parliament, opposes CBDC, saying it could threaten both the government and the public.
and report In a paper published in January 2022, the Commission said there was no compelling case for why the UK would need a digital pound. The report was able to find some advantages for central bank digital currencies, but concluded that they could present significant challenges to financial stability and privacy protection.