Cryptocurrency Linked To Sterling To Be Created By The Bank of Englandbr>
The Bank of England (BoE), the UK’s central bank, has set up a research unit to investigate the possibility of issuing its own cryptocurrency linked to the value of sterling, the currency of the UK.
The unit is expected to report back within the next 12 months. If approved, the cryptocurrency could allow UK citizens to keep their money with the central bank itself, cutting out the need for a retail bank. Big-ticket transactions, such as buying a house, could happen in nanoseconds.
BoE governor Mark Carney told a Treasury Select Committee before Christmas that he had “participated in discussions with major central banks on this issue,” adding that those meetings would resume in January. Carney also stated that the underlying technology is actually of a fair bit of interest. They are working with it at the BoE.
“Most interesting application that would be beneficial for financial stability and efficiency would be using the blockchain technology for ‘settlements’ between central banks,” said Carney. “We are on the case.”
Last year, the BoE commissioned Dr. George Danezis of the University College London to devise a cryptocurrency with state-assumed backing called RSCoin. RSCoin provides the benefit over existing (non-crypto) currencies of a transparent transaction ledger, a distributed system for maintaining it, and a globally visible monetary supply. Every unit of a particular currency is created by a particular central bank, making cryptocurrencies based on RSCoin significantly more palatable to governments. This makes monetary policy transparent, allows direct access to payments and value transfers, supports pseudonymity, and benefits from innovative uses of blockchains and digital money.