The United Kingdom has added its name to a growing list of countries looking to leverage the growing popularity of cryptocurrency. Chancellor Rishi Sunak made the announcement at a fintech industry conference, confirming that the UK government is considering the introduction of its own form of virtual currency.
“We’re launching a new taskforce between the Treasury and the Bank of England to coordinate exploratory work on a potential central bank digital currency,” Mr. Sunak explained.
Meanwhile, further details were released by the Bank of England in a statement that confirmed that the proposed currency would be introduced as a “new form of digital money issued by the Bank of England and for use by households and businesses”, designed to coexist with conventional currency rather than replace it.
No formal decision has yet been made on whether a digital version of the GBP will be introduced, with the British government having simply confirmed its intent to investigate the “objectives, use cases, opportunities, and risks” attached to such an initiative.
The Bank of England has also confirmed the establishment of a new internal unit tasked with examining the possibility of introducing a central bank digital currency in the UK.
China hit the headlines last week after officially becoming the world’s first country to introduce its own form of virtual currency. The People’s Bank of China is said to have been working on the digital yuan project for some time, which is now set to be tested on a broad scale at the 2022 Beijing Winter Olympics.
Cryptocurrency’s explosive performance
The news comes less than a week after the world’s most iconic crypto coin surged to a new record high, spurred by a series of high-profile coin purchases and the upcoming debut of cryptocurrency exchange Coinbase.
Bitcoin, which was once trading at just $4, skyrocketed to an astonishing $64,829 last week before falling steeply to just over $56,000 over the course of the weekend due to concerns regarding regulation and the prohibition of its use by a number of national governments.
In the meantime, Doge Coin, a crypto coin originally inspired by a meme, likewise saw a major rally over the past couple of weeks. This has been interpreted by many analysts as further evidence of a bubble in the crypto market, which will inevitably burst at some point in the near future.
If introduced, central bank digital currencies would differ from decentralised crypto coins like Bitcoin, which are not regulated or controlled by any government or central bank. This is the main factor behind the extraordinary volatility of cryptocurrencies, which are known for swinging wildly in both directions with little to no predictability.