Bank of England official Ben Broadbent has expressed optimism that the proposed UK central bank digital currency “digital pound,” could provide lucrative opportunities for businesses in the region.
Earlier on Feb. 7, the Bank of England and the U.K. Treasury announced plans to explore potential use cases of a digital pound- a government-backed alternative to Bitcoin that will be developed on a private blockchain.
BOE deputy governor for monetary policy Ben Broadbent said that financial services built on new technologies like blockchain could be adopted easily, Bloomberg News reported Feb. 27.
He added that the digital pound “obviously brings opportunities for financial institutions, for businesses, and individuals.
Specifically, the digital pound will provide a faster alternative to online payment, provide lower settlement costs to businesses, and help protect the financial stability of the pound.
Broadbent said he expects to see improvements in the digital pound which will lead to a reduction in friction and cost of payment.
Plans for the digital pound
The Bank of England (BOE) initiated the plans to launch a digital pound following findings that cash usage in the UK has fallen to as low as 15% as of 2021.
The plan to launch a digital pound will help banks augment the available cash and provide a faster for businesses and individuals to settle their transactions.
According to the BOE, digital pound holders will not earn interest on their holdings; this will help disincentives consumers from withdrawing all their assets from traditional banks.
In addition to the digital pound, the agency said it would launch a digital wallet to make it easier for users to spend their assets, similar to a contactless payment app.
In the meantime, the BoE and Treasury are seeking feedback on how to improve the digital pound before it proceeds to the design stage after June 7.
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