The Bank of England (BoE) has conducted extensive research on the best format for developing a digital pound to complement the fiat currency system.
The Bank of England (BoE) is working to re-establish the pound as the world’s preferred reserve currency through a central bank digital currency (CBDC). The rise of the global pandemic of the post-Covid-19 digital economy through the cryptocurrency market has prompted most governments to consider moving to decentralized ledger technologies (DLTs). Moreover, the use of the digital economy is not only sustainable but also scalable in international markets. Thus, the forex market will greatly benefit from the rapidly verifiable digital currencies as well as the cryptocurrency market.
The Bank of England regarding the features of selling the digital pound key
Over the past few years, the Bank of England has collaborated with various entities in the search for a premium central bank digital currency. For example, in February 2022, the Bank of England and the Massachusetts Institute of Technology (MIT) agreed to collaborate on a twelve-month research project on CBDCs. The Bank of England has also conducted several consultations with the public on how to develop and deploy a central bank digital currency.
As a result, the Bank of England indicated that digital sterling or better known as Britcoin will focus primarily on user privacy. According to Tom Mouton, Director of Financial Technology at the Bank of England, the bank may look to technologies other than blockchain in developing its own central bank digital currencies. However, Mattoon indicated that the bank will give the security of user data a high priority to ensure that the government does not become a tracking agent for users.
“There will be no data shared with the Bank of England, we will know what transactions occurred but we will not have data on the person who did it. Whereas the wallet provider will have user data but will not have access to their transaction data,” Mouton noted.
The Bank of England is said to be comparing the efficiency of using blockchain technology over traditional ledgers in developing a private sector-compatible CBDC.
“We want to be compatible with distributed ledger business models in the private sector, but we are not convinced that distributed ledgers provide greater efficiencies over traditional ledgers.” added.
Currently, the Bank of England and the Treasury are awaiting feedback from stakeholders and are open until June 30.
market forecast
The Bank of England is racing against time to avoid losing its aesthetic appeal to other global currencies such as the Chinese Yuan which has already been introduced in digital form. The launch of the digital pound comes amid an interest rate hike of around 5 percent despite the Bank of England’s Monetary Policy Committee (MPC) attempt to bring inflation down to 2 percent.
As the United Kingdom operates freely free from the constraints of the European Union, the prospects for its future economic growth are tied to the relationship the country expects after Brexit.
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