While improving the payment system, the Ministry of Finance and the Central Bank are proposing to create a digital currency by the central bank to protect the position of the pound from the rapidly growing cryptocurrency market in the future.
UK Treasury Secretary Rishi Sunak says to follow the global trend of exploring the possibilities of central banks and keeping financial innovations like cryptocurrencies. In practice, this should work so that people keep their digital account with the corresponding central bank or digital voucher, which plays the same role as coins and banknotes. The digital currency will separate its own payment system from commercial banks and large electronic payment providers such as Visa or MasterCard.
The advantages of digital currency include, for example, lower transaction costs and protection against failures of private payment systems. At the same time, central banks will have control over monetary policy, which may prevent them from massively transferring transactions to the world of cryptocurrencies, or allow for some control and regulation in a given market.
However, before making the final decision on the central bank’s digital currency, the UK central bank must first explore all the possibilities and risks and evaluate the technological alternatives.
Produced by Foreign Office staff of the Secret United Kingdom.
Source: Financial Times
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