• The Bank of England and HM Treasury have issued a digital pound consultation paper on Tuesday 7 February 2023.
  • Central Bank Digital Currency (CBDC) is not envisioned as a replacement for cash, but as a digital currency that households and businesses can use in their daily lives.
  • Lucas Kiely, CIO of Yield App, says the digital pound can support cryptocurrencies rather than threaten them.

Plans to introduce the UK’s digital pound have entered the next phase by the Bank of England and HM Treasury. consultation form in a project.

BoE announcement on Tuesday highlight potentially “A new form of money for households and businesses.This paper was presented to Parliament by the UK Treasury Secretary for Economic Affairs.

The central bank has acknowledged that the introduction of the digital pound may take time, but said the preparatory work to put the necessary infrastructure in place is justified.

The digital pound will become a retail central bank digital currency (CBDC), digital money for households and businesses to use for everyday payments, issued by the central bank, the Bank of England. The Bank of England and HM Treasury will accelerate work on the digital pound technology and policy architecture.,” reads part of the paper published Tuesday.

CBDC Like Digital Pound Will Support Crypto, Not Kill It

The plans for a UK Central Bank Digital Currency (CBDC) have emerged as the push for CBDC creation and deployment continues to gain momentum. It also follows regulatory attention to cryptocurrencies after a brutal winter and the spectacular collapse of several major cryptocurrency projects.

But despite all the ups and downs of the sector, the launch of a CBDC like the digital pound does not mean the doom of cryptocurrencies, said Lucas Keely, CIO of Digital Wealth Platforms. yield app Said coin journal in the commentary.

According to him, CBDC is inevitable in an increasingly digital world, with governments looking to benefit from the increased mass adoption of blockchain technology.

If all payments were made on-chain and governments could track a stable digital currency, many problems would be solved. Tax avoidance will be harder, welfare payments will be simpler, and governments will be able to control what those welfare payments are spent on.

Benefits to the public, such as faster payment systems and accessible credit histories, can, of course, be negated by potential downsides, such as government seizures of assets, monitoring of personal spending, and more. However, Kiely is optimistic about the positive impact CBDC will have on the financial sector and cryptocurrencies.

The digital pound will not replace UK cash, but will be issued and used alongside UK cash, according to details in the consultation paper.

In particular, the Bank of England sees the digital pound as a project that will help maintain the usefulness of central bank currencies in the ever-changing global financial ecosystem. Apart from safeguarding the country’s monetary sovereignty, the digital pound could help increase competition and innovation within the UK payments industry.

Cryptocurrencies Are Taking Big Leaps, But They Still Operate In The ShadowsYield App’s CIO noted, adding that consolidation across the broader financial sector could bring more upsides than downsides. he added:

Rather than threatening cryptocurrency development, a CBDC could pave the way for crypto adoption and growth by facilitating the traditional financial sector’s involvement in on-chain finance.

Bank of England and HM Treasury documents are seeking public comment on the project and will form the basis for next steps, including a pilot phase. After launch, the central bank will limit individual holdings to £10,000 to £20,000 to prevent CBDC “hoarding”.

By Jules

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