Rishi Sunak to Replace UK Currency with ‘Britcoin’?

Chancellor Rishi Sunak is reportedly planning to replace UK currency with official digital currency ‘Britcoin’.

Rishi Sunak to Replace UK Currency with 'Britcoin' f.

'Britcoin' would be linked to the value of the pound

Chancellor Rishi Sunak is believed to be replacing UK cash with a new ‘Britcoin’ digital currency.

In what would be the biggest change in the monetary system for centuries, the Bank of England would establish a direct digital equivalent to physical money and take control of it in the same way as regular money.

Supporters in the Treasury say it would allow the Bank to give the economy a boost in times of financial crisis by paying the ‘Britcoins’ directly into people’s bank accounts.

‘Britcoin’ may also decrease the cost and time it takes to make online payments and transfer money around the banking system.

‘Britcoin’ could also cut banking costs for small firms.

But there are warnings that a digital version of the pound could result in greater financial instability.

This would make it harder for the Bank to regulate the economy with monetary policies such as setting interest rates.

There are also concerns that it would lead to higher loan and mortgage rates.

A team of Treasury and Bank officials known as the Central Bank Digital Currency has been set up to examine the merits of ‘Britcoin’.

The team is expected to report to Rishi Sunak by the end of 2021.

The Treasury is said to be keener than the Bank of England on the idea of creating an official digital currency.

This is because they are aware of the huge numbers of people investing in cryptocurrencies.

But unlike other cryptocurrencies, ‘Britcoin’ would be linked to the value of the pound and backed by the central bank.

Under plans being considered by officials, consumers might be able to hold ‘Britcoin’ in accounts directly linked to the Bank of England.

Officials have not decided whether or not to attach interest rates to ‘Britcoin’, which might make it enticing to savers as an alternative to cash.

Companies could accept the digital currency for ordinary payments that customers would otherwise have made with a debit or credit card.

However, the amount of ‘Britcoin’ each individual could hold is likely to be limited initially.

Most importantly, consumers will be able to easily change pound Sterling into ‘Britcoin’.

It would also be made easy and fast to transfer ‘Britcoin’ back into ordinary cash that could be withdrawn from an ATM.

A digital currency where customers have accounts directly linked to the Bank of England would also make it far easier to issue so-called ‘helicopter’ money, where funds are injected into people’s pockets by the Government.

This could prove a more effective way of stimulating the economy in times of crisis than quantitative easing (QE).

The Daily Mail reported that QE has been used since the 2009 financial crisis to flood the banking system with new money.

However, the scheme has been criticised for storing up potential inflation while failing to get the cash to trickle down to households and businesses in the rest of the economy.

Dhiren is a journalism graduate with a passion for gaming, watching films and sports. He also enjoys cooking from time to time. His motto is to “Live life one day at a time.”