Rishi Sunak to explore launching a digital currency in the UK

RISHI Sunak is setting up a taskforce to explore the option of launching a UK digital currency.

The Bank of England and the Treasury will jointly examine how a central bank digital currency would work.

They will examine the risks as well as the benefits.

The plan is part of a package of  possible reforms unveiled by Chancellor Rishi Sunak yesterday to boost the UK’s financial technology sector and cement London’s standing as a financial centre.

The idea of a central bank digital currency draws inspiration from Bitcoin and other cryptocurrencies - it has been dubbed "Britcoin";.

It is a step along the path of creating an e-pound, a sort of digital bank note.

Cryptocurrencies like bitcoin are not issued or controlled by any single organisation and are created by a computer process called "mining".

A "digital pound" would be issued by the Bank of England in the same way as physical coins and notes.

Digital currencies could bring benefits in the way cross-border payments are made, and are on rise amid a decline in cash payments.

However, authorities said they are still committed to supplying cash to those who need it.

Currently, only the Bahamas has such a currency, although China is trialling it in several cities.

Mr Sunak said: “Our vision is for a more open, greener, and more technologically advanced financial services sector.

“The UK is already known for being at the forefront of innovation, but we need to go further.

"The steps I’ve outlined, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward.

“And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.”

In addition, the Financial Conduct Authority (FCA) will set up a so-called scale box, which would support companies trying to scale up innovative technology.

The Chancellor also committed to consult on proposals from a review into how companies list their shares on a public market in the UK.  

Yesterday, Bitcoin suffered its biggest one-day drop in two months.

There have also been warnings around scams related to cryptocurrencies.