The government of the UK has been cracking down on cryptocurrencies from the start of the current year. Several banking organizations hailing from the region have been issuing warnings to their customers for not engaging in cryptocurrency trading. On the other hand, some banks have banned crypto custodial services for their clients.
However, the Governor of the Bank of England has recently told media that CBDCs or the Central Bank Digital Currencies are a revolutionary step for financial infrastructure. Some of the cryptocurrency proponents do not like the idea of CBDC, claiming that it will provide the government with too much knowledge and information about every single transaction made at any point.
The Governor of Bank of England, Andrew Bailey, and the deputy governor Sir Jon Cunliffe were recently interviewed by the Economic Affairs Committee. When asked about the question of CBDC and financial innovation surrounding blockchain technology by the legislators, Cunliffe replied that it is not confirmed that how the innovators are going to design the new digital pound.
He further added that, however, there are several digitally managed ledgers used in the cryptocurrency market; therefore, it is safe to assume that the new CBDC is going to function probably. It is worth noting that the BoE has set up a task force to research the impact of the digital pound specifically for remuneration compensation like government salaries and pensions etc.
UK Citizens have Stopped Using Physical Pounds during the Pandemic
Deputy Governor Cunliffe claimed that due to the onslaught of the COVID-19 pandemic, a significant number of domestic users have stopped dealing in physical currencies. He further added that the research report in this regard has revealed that around 20% of the households will have no problem moving from the current banking system to Central banking for the digital pound.
He also aired a warning that the increasing popularity of cryptocurrencies in the current year has become a threat to the financial stability of the country. He explained that 95% of the cryptocurrencies from the decentralized market operate without any centralized banking system. Furthermore, the remaining 5% are stablecoins. Meanwhile, the governor of the Federal Reserve has recently claimed that stablecoin can make the presence of CBDC redundant.