MPs have been told by the Treasury’s economic secretary that the government is looking at introducing a digital pound.
Andrew Griffith stated that the UK was determined to become a global crypto hub.
The government was still “a long way off the road… to establish an arrangement for wholesale use, for payments purposes, of stablecoins”.
Stablecoins have a fixed value that is linked to assets like gold or traditional currencies.
For households and businesses to use, the currency would be used alongside cash and bank deposits rather than replacing them.
‘Game-changing technology
According to Mr Griffith, a public consultation would be held on the attributes and functions of a digital pound in the coming weeks.
He stated that he wanted to see a system in place for stablecoins wholesale use. This is the FSMB Bill.
All over the globe, central banks are exploring digital currencies.
China is, by example, a leader in this global race and is currently testing a digital currency in major cities like Beijing, Shanghai, and Shenzhen.
In July 2021, the European Central Bank took the first step towards launching an electronic version of the euro. It initiated a 24-month investigation phase that would be followed by three years of implementation.
And Mr Griffith said to the committee that it was right to try to embrace disruptive technologies, especially when there is such a strong financial and fintech sector.
He said he wanted to create the possibility for “potentially disruptive technology that can turbocharge all [financial] sectors”.
Consumer protection
The “crypto winter”, an abrupt decline in Bitcoin’s value and other assets, has raised concerns about whether any cryptocurrency can ever truly be considered stable.
It has the potential for raising many issues of public policy.
A public consultation will also take place on Britain’s first general regulatory approach for crypto assets. This sector has been under intense scrutiny in recent weeks.
The consultation will be part of the “research-and-exploration” phase and will assist both the Bank of England as well as the government in developing the plans over the next few years.
Mr Griffith stated to the committee that being right was more important than being first when it came time to regulate crypto. This is despite the UK’s strong financial reputation.
He said, “It will take a long lead time activity.”
‘Right balances’
The EU has created the first global comprehensive set of rules to regulate crypto markets.
They will be approved in the next few weeks and will take effect in 2024.
Griffith suggested that the UK rules could be expanded to include decentralised financing and that everyone would benefit from greater transparency.
He stated that he wanted the “right regime”, which he explained to the committee.
He also promised to host “at least six” roundtables with crypto industry professionals, in order to “expose ourselves as regulators or decision makers”.
