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UK might need a digital pound

by on08 February 2023

After years of fighting off the Euro

After years of being too frightened to adopt the Euro, the Bank of England and HM Treasury have declared the UK will probably need a digital version of the pound.

The pair have started a "consultation process" to advance plans for Britcoin so the nation is prepared if a UK government is brave enough to take on its nationalists who see the pound as a symbol of everything that was great about the UK.

A consultation paper describing the central bank digital currency (CBDC) states that the two abovementioned institutions have already considered Britcoin. Based on those efforts, they "judge that it is likely a digital pound will be needed in the future."

"It is too early to commit to build the infrastructure for one, but we are convinced that further preparatory work is justified," the paper states.

A separate digital pound working technology working paper outlines the need for a central ledger to store user balances. In its consideration of how best to build that ledger, the paper's authors might find themselves irritating blockheads with the following observation:

"Distributed ledger technologies and blockchain-based solutions might have advantages in guaranteeing consistency and resilience, but they present privacy, scalability and security challenges. Centrally governed, distributed database technologies might achieve the ledger requirements without such limitations. Therefore, these technologies might be appropriate for the core ledger design."

If Britcoin is ever greenlit, the documents suggest building it will require several years, and that great care will be required to ensure the public understands that the currency affords the same privacy as cash and is not being used by the government to track citizens spending and hit them for tax.

It does not appear that the digital pound would be any sort of cryptocurrency or tokenized asset as it would be issued by the Bank of England and not the private sector. This means that it will have intrinsic value and not be volatile – unlike unbacked cryptoassets – as there would be a central authority to back it.

"A decision about whether to implement a digital pound will be taken around the middle of the decade and will largely be based on future developments in money and payments," the announcement states.


Last modified on 08 February 2023
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