The new year has started in full steam for the UK central bank, where a research unit was been established by the Bank of England (BoE) to investigate the introduction of a new cryptocurrency that is linked to pounds sterling. According to a report by The Telegraph, the team involved should report back within the next 12 months.
If approved, this new central bank-issued cryptocurrency would allow British users to invest in cryptocurrencies but from the perspective of a central bank – and keep their digital money in it – without the need for retail banks. Obviously, the BoE sees great potential here and has an interest in such system.
However, what’s more important is the fact that the BoE governor Dr. Mark Carney strongly believes that this can happen, saying that he already participated in discussions with major central banks on launching digital currencies. He added:
“The underlying technology [blockchain] is actually of a fair bit of interest. We are working with it at the Bank of England.”
Carney also added that using the blockchain technology for bank settlements would be “the most interesting application” which would benefit financial stability and efficiency. This news comes after a report in September 2017, where Simon Scorer, a researcher at the Bank of England has publicly discussed the requirements for a central bank to issue a digital currency. At the time, Scorer said:
“Like current financial infrastructure, a widely used [central bank digital currency] would likely be considered critical national infrastructure. … It would need to be operational across the country, 24 hours a day, 365 days a year.”
With this, Scorer said that such currency is great but would need ‘extraordinary levels of resilience’ against a range of problems.
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