Bank of England ponders minting 'Britcoin' to sit alongside the Pound
- Reference: 1618901762
- News link: https://www.theregister.co.uk/2021/04/20/britcoin_taskforce/
- Source link:
Let's call it "Britcoin".
[1]
A Bank of England [2]announcement quickly points out that no decision has been taken to greenlight Britcoin and omits any mention of why the time is right to ponder a digital currency.
But the bank has nonetheless decided to "engage widely with stakeholders on the benefits, risks and practicalities" of a CBDC.
[3]
So broad is the effort to ponder a CBDC that four new bodies have been created to do the job.
One is the Taskforce, which "aims to ensure a strategic approach is adopted between the UK authorities as they explore CBDC, in line with their statutory objectives, and to promote close coordination between them," the announcement says. To make that happen, the Taskforce will:
Coordinate exploration of the objectives, use cases, opportunities and risks of a potential UK CBDC
Guide evaluation of the design features a CBDC must display to achieve our goals
Support a rigorous, coherent and comprehensive assessment of the overall case for a UK CBDC
Monitor international CBDC developments to ensure the UK remains at the forefront of global innovation
The bank has also created a "CBDC Engagement Forum to engage senior stakeholders and gather strategic input on all non-technology aspects of CBDC." Members will be drawn from financial institutions, civil society groups, merchants, business users and consumers.
Techies are also represented by a "CBDC Technology Forum" that will "engage stakeholders and gather input on all technology aspects of CBDC from a diverse cross-section of expertise and perspectives." Folk from financial institutions, academia, fintechs, infrastructure providers and technology firms will be invited onto this Forum.
Japan tests digital currency, because all the cool kids are doing it already [4]READ MORE
Also new is a CBDC Unit at the Bank of England itself to lead Britcoin ponderings and engagement at home and abroad. Jon Cunliffe, Deputy Governor for Financial Stability, will oversee the work of the CBDC Unit.
The bank has pitched Britcoin as "a new form of digital money issued by the Bank of England and for use by households and businesses" and said it would "exist alongside cash and bank deposits, rather than replacing them."
Let's get back to the question of "why now?" for the Bank of England?
The Register suggests the Bank of England has moved before it gets left behind. The Bank for International Settlements' late 2020 [5]survey [PDF] of 60 central banks found around 60 per cent were already conducting digital currency experiments or proofs of concept, up from 42 per cent in 2019. The survey also found that 14 per cent were "moving forward to development and pilot arrangements."
The survey also found that preserving the stability of financial systems is a major motivator in case consumers start to prefer unregulated digital currencies or coins in other nations' currencies.
China sets out world domination plan for its digital currency [6]READ MORE
And which nation is most advanced with tests of its own CBDC, including for [7]cross-border payments , while admitting it likes digital cash because it will let it surveil transactions?
China, that's who.
China has also adopted a very conservative model for its Digital Yuan, [8]restricting issuance rights to big commercial banks rather than link it to the burgeoning electronic payment systems offered by web giants like Alibaba and Tencent.
[9]
But China is also clearly interested in the Digital Yuan's potential to handle cross-border transactions, a role in which it could route around some commonly used players in the global payments and banking systems. And those players are dominated by US and European concerns. ®
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[2] https://www.bankofengland.co.uk/news/2021/april/bank-of-england-statement-on-central-bank-digital-currency
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_security/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YH6mOLo0t1T0NbDcqllkuwAAAMw&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[4] https://www.theregister.com/2021/04/06/japan_pursues_digital_currency_because/
[5] https://www.bis.org/publ/bppdf/bispap114.pdf
[6] https://www.theregister.com/2020/09/23/digital_yuan_world_domination_plan/
[7] https://www.theregister.com/2021/02/25/multiple_central_bank_digital_currency_bridge/
[8] https://www.theregister.com/2020/09/16/digital_yuan_policy/
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[10] https://whitepapers.theregister.com/
Four new bodies
I take it from the fact that four committees have been assembled the Bank or government has no intention of going down the Digital UK Currency road any time soon.
The four groups will have differing opinions on every aspect of designing and implementing a system, many of them will have no idea of what a Blockchain is and at least a few will argue about which image of the Queen's head to use on the coinage.
Eventually, a fifth committee will be created to take on board or discard notions from the first four, will disregard most of the recommendations and then rush out an insecure iteration using a private company that normally makes toothbrushes for an undisclosed figure in the billions.
Where is the Me a Cynic' icon?
They would be better off thinking about how to destroy bitcoin. It's a resource disaster and that will only get worse as bitcoins become harder and harder to mine.
The very next story on the Radio 4 news this morning was about the govt setting CO2 reduction targets! Although I suppose if we cover the entire country in windmills we might generate enough to cover our delightful Britcoins! At least we'll all be able to recycle all the copper we have lying about...
Global Warming?
Is it possible for Britcoin to have a lower carbon footprint than the current system of financial transfers? If not, it needs stopping now.
......using countries as tax havens to avoid taxes is so pre-21st.....
What could possibly go wrong?
Just asking for a banana republic with no bananas.
Could it be the South Sea Bubble all over again?
Re: What could possibly go wrong?
Or the Dutch Tulip Mania. :/
for use by households and businesses
> for use by households and businesses
So, in other words, completely and utterly indistinguishable from electronic bank transfers as far as the typical household or business is concerned.
What exactly are the benefits then - as opposed to simpler & easier payments of existing pounds?
(icon - we need a rhetorical question icon)
Re: for use by households and businesses
At present money is fungible - if I pay £100 into my bank account and later withdraw £100 it's impossible to say that I withdrew the exact same money that I paid in. Britcoins presumably have serial numbers which can be tracked.
I hope its going to be less resource hungry than other crypto currencies otherwise we might need a few extra nuclear power stations to keep it running ;)
Not all cryptocurrencies are created equal.
According to a study conducted by Stanford and Stockholm University, XRP uses around 1000th of the electricity required by the existing Visa network in the US.
Re: "exist alongside cash and bank deposits, rather than replacing them."
For now. I think we can all see where they'd like this to go in the longer term. Every transaction publicly visible for ever.
The vast majority of £ are already digital money. We have £94.6tn of notes and coins, and £284.2tn in bank balances.
What is Britcoin going to do that we don't already have?
Bank-backed cyber-currency seems to be pointless. Surely the main reasons people want Bitcoins are:
- You can create them using other people's resources, so they are nominally 'free' to obtain.
- They're still going crazily up in value w.r.t. real currency, so look like a good investment.
If we end up with a cyber-currency that is tied to sterling, and managed by a bank, both apparent advantages evaporate.
Bank of England Goes Swinging
Better late to the orgy than never, eh?