The UK is getting closure to its objective of introducing a central bank digital currency (CBDC). Recently, it released a consultation paper elaborating on the digital pound that is going to be introduced in the country soon. The respective CBDC has been nicknamed “Britcoin” by the common public.
Bank of England Proposes Mutual Existence of Digital Pound and Private Stablecoins in Its Consultation Paper
Recently, a consultation paper of up to 116 pages was mutually released by His Majesty’s Treasury and the Bank of England (BoE). They additionally issued a paper on technology working to explore the economic as well as the technical structure-related considerations.
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Notwithstanding the elevation in the stablecoins, which were released privately in the previous days, the paper stated that the digital pound and other such CBDCs could co-exist. As per the paper, an economy of mixed payments is expected with the mutual existence of these digital assets.
It was noted in the paper that as cash operates in parallel with private money, there is no requirement for the digital pound to dominate the rest of the types of money to cope with its goals related to public policy.
While the Treasury and the Bank of England expect to introduce a digital pound by the year 2025, at present, they are expressing a hundred percent confidence in the eventual launch of the digital currency.
The Treasury and the chief bank of the UK think that there is a requirement for a digital pound to operate in the jurisdiction of the country, although no decision has been taken to release one at present, as disclosed by the paper. The paper elaborated on the primary motivator at the back of introducing the digital pound.
It revealed that this move is being made to guarantee the central bank-issued digital pound’s strong position in the economy to enhance safety and confidence in the monetary system. According to the paper, this would help promote innovation, efficiency, as well as choice in the field of domestic payments.
To accomplish this objective, the paper added, there would be a requirement for the e-GBP to have a broad-scale adoption across the retail ecosystem via several collaborations between the public and private sectors.
The paper asserted that the digital pound could play the role that is played by cash in securing the monetary system of the United Kingdom, but it requires being sufficiently adopted and usable by businesses and households existing around the country.
The consumers will be provided access to e-GBP by linking to API run by the private sector. This will, in turn, link to the main ledger of the central bank.
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Other programmability features take into account atomic swaps and smart contracts, enabling the movement of assets across networks. The paper mentions that substantial assistance would be provided by the private sector to construct such an infrastructure.
The Paper Suggests Limiting Individual Holdings in Digital Pound
Another recommendation that the paper makes is related to the implementation of individual limits ranging from $12,000 (£10,000) to $24,000 (£20,000). The paper suggests that this would prevent the use in the form of a savings account. The paper explains that limiting the extent of the holdings of the individuals would cope with diverse hazards and is crucial during the initial phase.
Several members of the crypto community additionally raised some privacy-related concerns. They were additionally taken into consideration. Without providing particulars, the paper specifies that e-GBP would follow stringent standards related to data protection and privacy.