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UK considers launching its own crypto currency

written by Bella Palmer
crypto-currency

The move comes as part of a wider package of measures to boost the UK’s fintech and financial services industries

The UK government is establishing a special taskforce that combines expertise from the Treasury and the Bank of England to explore the launch of a central bank digital currency (CBDC).

The state-backed digital currency would operate alongside traditional currencies, and allow households and businesses to make payments using digital money issued by the Bank of England. The group will consult with stakeholders to explore how viable launching a CBDC would be, as well as how this is being handled abroad.

CBDCs are fundamentally different from cryptocurrencies because they’re managed by a central authority, such as the Bank of England, while cryptocurrencies such as Bitcoin are decentralised assets and managed through a distributed ledger.

The announcement comes as part of a wider package of measures the government is hoping will boost the UK’s fintech and financial services industries. As part of the policy, the government will establish a Centre for Finance, Innovation & Technology as well as the second phase of its Digital Sandbox to allow companies to test concepts that tackle sustainability and climate change-related challenges.

Our vision is for a more open, greener, and more technologically advanced financial services sector, said the chancellor Rishi Sunak. The UK is already known for being at the forefront of innovation, but we need to go further.

The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward. And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre, he said.

Alongside prospective plans to create a digital currency, the new sandbox will give companies experimenting with distributed ledger technology the space to develop and execute their ideas.

Fintech firms will also be offered a ‘scale box’, which is a package of measures designed to guide these companies scale-up. This comes alongside a ‘scale up’ visa stream to allow skilled people a route to work at a recognised UK scale-up without the need for sponsorship.

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