Bank Of England Begins to Assess the Potential Of Digital Currency
Rishi Sunak, chancellor of the Exchequer for the United Kingdom, has included cryptocurrencies and stablecoins on the list of financial reforms the government plans to undertake in the next few years.
Speaking to lawmakers at the Lord Mayor of London’s residence on Thursday, the chancellor said the U.K. government would be implementing recommendations to establish the country as a center of fintech innovation and business. Though Sunak said the U.K. would be protecting its citizens’ access to cash, he added authorities would be monitoring updates in finance and technology as well as working on its own reforms regarding digital assets.
Based on an independent review of the U.K. fintech sector conducted by entrepreneur Ron Kalifa, Sunak said officials would be consulting on pioneering reforms “to support the safe adoption of cryptoassets and stablecoins” as well as explore the case for the Bank of England issuing a central bank digital currency, or CBDC. The report, released in February, proposed changes to the country’s regulatory framework on new technologies, encouraging education in fintech, nurturing existing fintech firms in the U.K., and more.
The United Kingdom has been exploring a CBDC for some time. The country took a major step last year when both the Bank of England and HM Treasury announced they were researching “whether and how central banks can issue their own digital currencies as a complement to cash.” Following the publication of Kalifa’s review in February, authorities have gone on to establish a central bank digital currency task force to explore preliminary issues associated with the design, implementation and operation of a CBDC in the United Kingdom.
While Sunak said in November that Brexit offered an opportunity for the U.K. to revamp its financial services sector, some have expressed concerns about the effects a CBDC rollout would have on the market. The regulatory implications of stablecoins, concerns surrounding monetary sovereignty and consumer protections, and access to cash for individuals are under scrutiny as the U.K. explores further transitioning to a digital currency.
“While I believe in the power of new technology, we also need to manage its impact on our economy and society,” said the chancellor.