ryptocurrencies today got a reputational shot in the arm from the Treasury today just days after the first blue chip flotation of a major crypto exchange burnished their credentials.
The government announced the launch of a taskforce bringing together the Treasury and the Bank of England to examine whether to introduce a so-called central bank digital currency (CBDC).
The taskforce is to be headed by Bank of England deputy governor Jon Cunliffe, and the Treasury’s Katharine Braddick.
What is a CBDC?
CBDCs are inspired by bitcoin but differ because they are electronic versions of a fiat currency such as the pound.
Basically, the central bank creates e-money tokens just as it creates paper money, allowing the public to use it as a store of value to buy and sell goods and services, or simply to hold onto it as a form of savings.
Central banks could enable people to hold money electronically with a universal central bank account and not have to rely on banks and clearing houses.
This would mean people and businesses could bypass middlemen like banks and settlement services, transferring ownership of the tokenised pounds instantly and seamlessly between each other.
China is already working on a CBDC system as it races towards a cashless society. Work on a digital euro is underway and US policymakers have also talked of a possible digital