Britcoin the Cash Replacement by BoE?

Britcoin the Cash Replacement by BoE?

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An editor at Coincrop

15 Feb 2023 | 5 min read


he Bank of England has heralded Britcoin CBDC as a viable replacement to cash, with wallets having an upper limit of between £10-20k.

In a move towards introducing Central Bank Digital Currency, the UK has set an upper limit of between £10,000 to £20,000 ($12,017 to $24,033) for digital wallet holdings. This was reported by an official from the Bank of England (BOE).

The Bank of England is expected to launch their Central Bank Digital Currency as soon as 2030, according to a Bloomberg report released on February 8th.

Nonetheless, there are initiatives in place to reduce the impact of this on British banks' finances.

Until June, the BOE is actively engaging in a consultation process to adopt its own Central Bank Digital Currency (CBDC), referred to as "Britcoin" by industry and media outlets.

Bank of England Deputy Governor, Jon Cunliffe, recently suggested that the requirement for a digital pound is likely to become apparent soon in order to enable smooth transactions via online and mobile channels. This news has grabbed attention from leading industry professionals due to its potential ramifications on financial affairs in the UK.

Recent government data reveals the entire UK financial services sector generated a remarkable £174 billion in 2022, which is equivalent to 8.3% of total economic output.

According to Cunliffe, a £10,000 limit would enable three-quarters of people to receive their pay in digital pounds. However, if the limit were increased to £20,000 it could allow nearly everybody access to this type of payment.

Analysts suggest that in order for regulators to be successful, they must safeguard the CBDC from being exploited and used only as a speculative asset. The Bank of England wants their digital currency to imitate cash with its worth maintained—not one which offers interest or is utilized as an instrument by speculators," Bloomberg reported.

Although a CBDC would supply the central bank with additional control of the economy, some analysts alert that this could detract from traditional banks' part in it.

Adopting CBDCs could potentially lead to a decrease in demand for traditional bank deposits, as consumers may opt to keep their wealth stored within these digital currencies. This shift could consequently result in diminished income for conventional banks and perhaps even cause decreased lending, considering the potential incapacity of such financial institutions to access suitable funding sources - an issue which has been forewarned by analysts.

Cunliffe observed that everyday transactions using cash have declined by 60% in the past 15 years, leaving a huge gap for banks to fill. To address this issue, the BOE is taking care to implement measured steps while respecting traditional banking practices.

“It’s perhaps no accident that use of cash went down in the pandemic, but the holdings of cash went up,” According to Cunliffe, “There are periods when people want to know that their money is anchored or could be anchored in the safest form, which is cash. If we think cash disappears, or it’s just there but hardly usable…then I think you have a risk that confidence in mone



An editor at Coincrop
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Jonathan is a Coincrop staff writer based in the UK, covering the best rates for cryptocurrency earning and borrowing products. When not at work, he's likely sailing.

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