Japan’s largest bank developing new digital currency
And the CityUnited project has urged Boris Johnson and Rishi Sunak to be bold and think big as they look a future in which e-commerce will increasingly take centre-stage – emphasising the potential for the UK to get a massive head-start on the European Union. China is already pushing ahead with its own plan to launch its Central Bank Digital Currency’ by the time of next year’s Beijing Winter Olympics – and last month Mr Sunak announced the creation of a task force aimed at exploring the possibility of Britain launching what he termed “Britcoin”.
Speaking today, Lord Hannan of Kingsclere, who sits on the CityUnited project’s advisory board, said: “State-backed digital currencies are coming: that is not in doubt.
“The question is whether another country will get there early enough to offer an alternative model to China’s – a model more rooted in the principles of privacy and private property.
“Britain, with its concentration of financial services expertise, its fintech hub and its common law system, is ideally placed to be that country.”
Boris Johnson has been urged to be bold – and press ahead with a digital currency
Lord Hannan of Cleremont – formerly Daniel MEP, the ex-Tory MEP
CityUnited’s analysts believe it is crucial that the UK is not left behind – and has mapped out the way forward in its Aurora report, published today.
Specifically, it proposes a CBDC for the wholesale sector, representing the bulk of UK banking transactions, involving the BoE and City institutions.
This would be followed by further enhancements designed for the retail sector, improving cost and efficiency for items such as fares, fees and media purchases; and providing simple payment and receipt access for the many still without bank accounts.
Boris Johnson and RIshi Sunak in Downing Street
The report argues the UK is in a vastly better position to launch such a currency than either the United States or the European Union, arguing that both are “potentially hidebound by the usual legal and constitutional morass and bureaucratic delays”.
An analysis in today’s Financial Times today suggested such a move could expand the UK’s economy by as much as £90billion.
The CityUnited Project’s Chairman Professor Daniel Hodson added: “We believe that there’s a great opportunity for the United Kingdom to gain ‘first mover advantage’ in the western world.
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RIshi Sunak has dubbed the concept “Britcoin”
Professor Daniel Hodson, the chairman of the CityUnited project
“The Aurora plan is based on proven technology thanks to the existing world-beating expertise and innovative drive of the City of London.
“If this can be brought together with the kind of ‘can-do approach that Kate Bingham brought to the vaccine rollout, then the UK would be very well-positioned to protect and enhance the UK’s financial services globally, and to deliver real benefits to every person in the United Kingdom.
“Our Aurora team is looking forward to discussing these proposals with the Bank of England and HM Treasury and other interested parties and stakeholders in the coming days and weeks.”
The Bank of England in Threadneedle Street
Speaking at a financial industry conference last month, Mr Sunak said: “We’re launching a new task force between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency (CBDC).
“The consultation process aims to deliver a rulebook that is fair, outcomes-based and supports competitiveness, whilst ensuring the UK maintains the highest regulatory standards.”
In reply to Treasury’s announcement of the task force, he subsequently tweeted the single word “Britcoin”.
Also last month, a report issued by the Bank of England on April 19 said: “The Bank provides physical money in the form of banknotes, which can be used by households and businesses to make payments. We also provide electronic money, but this can only be used by banks and selected financial institutions.
Xi Jinping, China’s President
“A Central Bank Digital Currency would make electronic money, issued by the Bank of England, available to all households and businesses. This would allow everyone to make electronic payments in central bank money.
If a CBDC were to be introduced, it would be denominated in pounds sterling, just like banknotes, so £10 of CBDC would always be worth the same as a £10 note.
“CBDC is sometimes thought of as equivalent to a digital banknote, although in some respects it may have as much in common with a bank deposit.
“Any CBDC would be introduced alongside – rather than replacing – cash and bank deposits.”