Britcoin is not a good idea, says the City
The city sounds alarm over the bank’s plans to allow investors to hold up to £20,000 in a so-called ‘britcoin’ digital currency – and warns it could lead to bank runs
The city has sounded the alarm over the Bank of England’s plans to allow investors to hold up to £20,000 in a so-called ‘britcoin’ digital currency – warning it could lead to bank runs.
The International Regulatory Strategy Group (IRSG), a lobbying group for the Square Mile, issued the warning following a consultation launched earlier this year by the Bank and Treasury.
It said the idea that the limits could eventually be lifted altogether was also “very worrying” given recent bank runs that saw a series of US banks and European giant Credit Suisse collapse.
Britcoin: Plans for a ‘digital pound’ that could be in effect by the second half of the decade were announced in a consultation launched in February
Plans for a ‘digital pound’ that could be in effect by the second half of the decade were announced in a consultation launched in February.
Under the proposals, there will be an initial limit of between £10,000 and £20,000 on how much money can be held in such accounts, and they will pay no interest – aimed at preventing an exodus of customers from their existing account providers.
But in its response to the consultation, the IRSG – a joint venture between TheCityUK and the City of London Corporation – was the latest to cast doubt on the plan. The group welcomed the general idea of the digital pound, saying that “to keep the UK competitive we cannot avoid developments in this area”.
But it said the proposed cap on the bills was too high, pointing out that an initiative by the European Central Bank was looking at a ceiling of €3,000 (£2,570).