UK government to investigate digital currency for international payments

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Valentina Vitali
Valentina Vitali
FXC Intelligence Research Analyst
Valentina is a Research Analyst at FXC Intelligence, the data sister company of FXcompared. Valentina is passionate about payments and fintech. Valentin enjoys analysing money transfer companies and… Read more
  • Ideas around introducing a digital currency will be drawn up by a taskforce designed to stimulate the country’s financial services sector and to counteract the effects of cash payments dropping in number.
  • The plans are still in taskforce phase and will be explored in more depth by both the Treasury and the Bank of England – though it comes as Sweden suggested that it could have such a currency in place within five years.
  • “The UK is already known for being at the forefront of innovation, but we need to go further,” said Rishi Sunak, who serves as the country’s Chancellor of the Exchequer – a post equivalent to finance minister.

The British government has set up a taskforce to investigate the prospect of introducing a centralised digital currency in the country.

The move, which could potentially have a profound impact on the online money transfer sector, would not see an official cryptocurrency replace traditional sterling if approved.

Instead, it would mean that the money supply was augmented with so-called digital bank notes that could be used alongside cash.

It appears unlikely that cash would be fully removed from circulation, press reports said.

The taskforce will look into whether the new suggested option is feasible, and if so how it is likely to work.

It will be a joint effort between the Treasury, which is the UK’s finance department, and the central bank – the Bank of England.

It is understood that the plans come against a backdrop of dropping cash payments.

In a statement, the country’s Chancellor of the Exchequer – a post equivalent to finance minister in other countries – said that the country was already on the way towards having a particular innovative finance sector.

Rishi Sunak also said that he wanted to see the sector become “greener”.

“Our vision is for a more open, greener, and more technologically advanced financial services sector,” he said.

“The UK is already known for being at the forefront of innovation, but we need to go further.” 

He went on to say that the plans for a new digital currency were helping to “push the boundaries” when it came to e-finance.

“The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward.

“And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.”

The move from Britain comes just a week after a senior figure in Sweden said that the country was likely to have a digital version of its currency in place within five years.

There are also experiments taking place in certain parts of China, while some smaller economies have been able to adopt such digital currencies completely.

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