Britcoin: Is a Digital Pound Really on The Horizon?
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The UK Parliament and the Bank of England (BOE) continue to “um and ah” over whether a state-backed digital pound also known as “Britcoin” or a Central Bank Digital Currency (CBDC) is needed.
On Wednesday, the UK’s Permanent Secretary of HM Treasury James Bowler, said a digital pound consultation will be launched and explained that the government is still in the phase of looking at challenges around CBDCs, reports CoinDesk.
The UK government has expressed concern about the risks to the banking system and the privacy issues surrounding the potential launch of a retail CBDC.
There is ongoing research around a digital pound but concrete plans on launching a CBDC in the UK. The next consultation will be between 7 February to 30 June.
The final decision on whether to build a digital pound will mostly depend on the findings from the design phase of the CBDC, and on how the payments landscape evolves in the UK and abroad in the coming years. If a decision is taken to proceed with building a digital pound, it could be launched in the second half of the decade – 2025-2030, says the UK parliament.
Britcoin is a Long Way Away
In June last year, the head of the BOE’s CBDC project, Tom Mutton, said the bank continues its research on whether building a digital pound, dubbed as Britcoin, is worth it. Mutton indicated that the earliest an eventual CBDC could appear is in the second half of this decade.
In a podcast interview, Mutton said that at a meeting of technologists hosted by the central bank to discuss the design of the digital pound, none of them agreed with each other at any point. The Bank of England is considering different versions of ledgers for its CBDC, including public blockchains similar that underpin cryptocurrencies such as bitcoin.
Once upon a time, the UK’s pound sterling was the primary reserve currency of much of the world in the 19th century and first half of the 20th century. But this ended after the economic distortions of World War I. The war dealt sharp blows to the British economy, and the pound suffered badly, giving way to the US dollar, according to the IMF.
Trump’s Anti CBDC Rant
Most recently former US President Donald Trump grabbed headlines speaking in Portsmouth, New Hampshire. He defined CBDCs as a “dangerous threat to freedom.” Pro-crypto former presidential candidate Vivek Ramaswamy, who recently dropped out of his campaign, was also present on stage, officially endorsing Trump. Trump has been dismissive about the value of cryptos and central bank digital currencies (CBDCs) in the past.
The UK has a history of siding behind the US and being influenced at times by decisions made in Washington. The US has shown scepticism toward CBDCs. “Our Committee recently visited the United States, where we heard from politicians, industry and regulators that the United States is not pursuing the development of a CBDC with any urgency,” shared the UK parliament in a 2023 report.
For now views on a retail CBDC remain mixed.
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