Digital currency is the order of the day and no country wants to be left behind. The Bank of England and HM Treasury announced on Monday that they will jointly seek ways to explore the vast benefits of digital money for both the public and private sectors. As at the time of the writing, a special taskforce has been appointed to look into the risks, benefits and feasibility of introducing a digital currency. The taskforce will work hand-in-hand with banks, fintech companies, payment infrastructure providers and technology companies. This will enable the taskforce to carry out a deep analysis on how introducing a digital currency will affect every financial player in the economy.
The UK can still be said to be in its early stage as for now, it is just beginning research and has not made or announced any decision to introduce a digital currency.
Of course, whatever has advantages comes with disadvantages as part of the package. That being said, there is a huge belief by some ‘doubting Thomases’ that introducing a digital currency could cause the financial system huge risk despite the obvious benefits that it has, and that instead of completely replacing bank notes digital currency, when introduced, should be used alongside them. Experts are of the belief that introducing a digital currency has the capacity to speed up domestic and cross-border transactions, reduce the costs associated with these transactions and even serve as a bridge that connects more people to the economy. Experts also pointed out that digital currencies could reduce the need for traditional banks and even undermine the status of the central bank that helps maintain financial stability.
As part of its duties, the special taskforce will monitor the global space for digital currency developments. About 86 percent of the world’s central banks are already weighing their options as to how they can integrate digital currency into their financial systems, according to the World Economic Forum.
Currently China is in the lead of experiments relating to digital currency integration. Countries like Japan and Switzerland have also launched their digital currency experiments.
Digital currency is changing payments systems and how transactions are carried out. While a number of global companies already accept digital currency as a means of payment, more companies are expected to join the train. This is why countries are looking for ways to integrate digital currency into their own financial systems so that they do not become obsolete.