Bank of England to Dedicate Team to Digital Currency

April 19, 2021
Kevin Larkin

Ever since its secession from the EU on January 31st, 2020 in Brexit, Britain has been working hard to make sure it remains competitive as a global fintech leader. Since then they have announced that they would be using Lithuania in a mutual agreement to obtain licenses and use their “sandbox” for product testing in comparable markets. Lithuania has stated that they are very committed to ensuring that cybersecurity is at the forefront of every operation. Their years of expertise in fintech makes preventing money laundering, one of their biggest concerns, much more manageable and hardly the issue it very much could be. One of Britain’s efforts to reign in fintech supremacy is their effort to become the world’s epicenter for cryptocurrency. This is certainly a hard fought battle, as the People’s Bank of China has been distributing their digital currency, the digital yuan, for the past few months with widespread success. They have recently announced that they don’t have plans to replace dollars with the digital yuan, so skeptics could still have their reliable traditional currency. This approach seems the most ideal, as it shows China is pushing hard into the future while not forcing all to accommodate if they chose not to.

Now, to expand on the announcement from Britain to fight to become the world’s cryptocurrency epicenter, the Bank of England is in the process of looking to develop their own digital currency. This would be similar to bitcoin, which is easily the world’s leader by a landslide of cryptocurrencies, but instead issued by the UK’s central bank. However, the Bank of England has stressed that this new digital currency wouldn’t be the same thing as cryptocurrency, and instead be classified as a Central Bank Digital Currency (CBDC). According to EveningStandard, a CBDC would instead be more like a digital form of cash, and they would “combine new payment systems with new currencies that aren’t issued by a central bank.” The Bank’s Financial Policy Committee has actually stated in a previous interview that although cryptocurrencies don’t pose a risk to the nation’s monetary stability, they could ultimately pose a risk to investors. This announcement challenges the original notion that they would like to be a distributor of cryptocurrency, and possibly with more developments this concept of a CBDC could instead become the new norm for countries looking to distribute some form of digital currency through their central banks.

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