The Bank of England’s strategy head William Lovell is pushing for a digital pound to lower retail payment risks.
According to the official, local banks acting as intermediaries between citizens and the central bank introduce risks a central bank digital currency (CBDC) can remedy.
Official Predicts Private Firms Will Do KYC for Britcoin
A retail CBDC would be equivalent to a banknote, Lovell stressed.
He added the private sector would develop the Know Your Customer (KYC) and Anti-Money Laundering (AML)layers to allay fears of a so-called surveillance state.
Citizens can hold and transact the CBDC in wallets provided by payment infrastructure providers. Meanwhile, the Bank of England would operate the ledger, recording transactions and confirming balances.
Whether users will take kindly to the bank enforcing transaction limits based on average incomes remains to be seen. The bank is considering limits of £5,000 ($3,900), £10,000 ($7,800), and £20,000 ($15,700) to prevent bank runs.
The BoE said its peer-to-peer retail CBDC payments trial succeeded earlier this year. Deputy Governor Sir Jon Cunliffe previously said a wholesale CBDC would likely precede a retail currency.
The bank will consult on the Digital Pound, colloquially referred to as Britcoin, until the end of June. It has received thousands of submissions since opening its consultation window in February.
Presently, the BoE is jointly enabling offline Canadian CBDC payments with Canada’s central bank.
The Swiss central bank has rejected a CBDC for increasing its risk through balance sheet expansion.
British Prime Minister May Never Achieve “Crypto Hub” Ambitions
Once aiming to make the UK a crypto hub, Prime Minster Rishi Sunak’s fate seems tied to the BoE’s inflation fight. In the last twelve months ending May, inflation has increased 7.9%.
Sunak backed BoE governor Andrew Bailey’s decisions despite Conservative Party resistance. The bank raised rates by 50 basis points on Thursday, sparking Tory outrage that the governor is plunging the economy into a recession.
Dissect the differences between a depression and a recession here.
Despite the macro furor, venture capital firm Andreessen Horowitz recently announced its intention to open a London office presence to stimulate the UK’s Web3 industry.
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Source: https://beincrypto.com/uk-needs-digital-pound-bank-england/