The UK is exploring the possibility of creating a central bank digital currency, an initiative the finance minister dubbed “Britcoin”.
The Bank of England and the Treasury announced that they are setting up a Central Bank Digital Currency taskforce to look into the risks and opportunities involved in creating a UK CBDC.
“A CBDC would be a new form of digital money issued by the Bank of England and for use by households and businesses,” the bank said in a statement.
Cash has fallen out of favor due to the coronavirus pandemic, as people try to avoid physical contact to limit the spread of the virus. A number of central banks around the world were already considering the possibility of issuing their own CBDCs before the pandemic struck, and the crisis has only added to calls to make such ideas a reality.
UK finance minister Rishi Sunak replied to the announcement on Twitter with the question “Britcoin?” – a play on words on the world’s most famous cryptocurrency, bitcoin.
Unlike traditional cryptocurrencies, which are issued by a decentralized system, CBDCs would be issued by central banks, who would retain control over the money supply. Supporters of the idea say it would allow central banks to better control issues like inflation.
China has already piloted a scheme to try out its own digital currency, whilst the European Central Bank is giving serious consideration to the launch of a digital Euro. It is expected that a number of nations will start to issue a digital currency in some form over the next two to three years.