One of the leaders of the Bank of England assessed the prospects for the digital pound. He believes that most of the demand for the digital pound, if released, will come from online and retail purchases.
William Lovell, Head of Emerging Technologies at the Bank of England, shared his opinion on the progress in researching the UK government cryptocurrency. In a blog post, he described possible options for a digital future in which various applications based on government cryptocurrency are used by consumers.
“The Bank of England is now actively exploring the possibility of issuing a digital pound. However, I must point out that the decision has not yet been made, ”wrote Lovell.
In terms of government cryptocurrency research, each country has specific motives and design issues. For example, Sweden is actively testing government cryptocurrencies due to the rapid decline in the use of cash. In his article, Lovell emphasized that several years ago in the UK, the number of card payments exceeded that for cash.
Most of the demand for the digital pound in the UK will come from online shopping and retail purchases, Lovell said. For companies, government cryptocurrency can be an attractive payroll option.
“Just as current electronic payments have evolved into use cases that no one initially thought of, the digital pound will have to evolve to meet requirements and business models that have not yet been invented,” he said.
While there is a demand for government cryptocurrency, a successful concept will face a number of challenges. Lovell’s article touches on the privacy issue. An inherent feature of cash is anonymity. According to a study by OMFIF, “privacy” and “security” are considered the most important characteristics of a government cryptocurrency.
Lovell said the Bank of England should think about how to ensure some degree of confidentiality for electronic payments, while maintaining compliance with the rules to combat financial crime.
“For digital currencies, another solution to this problem will need to be found. The security scheme must not only be reliable, but also inspire trust among ordinary users, ”he wrote.
Recall that according to a recent survey by Redfield & Wilton Strategies, 30% of Britons do not believe in the potential of the Bank of England digital currency and believe that it has more disadvantages than advantages. In April, the Bank of England, together with the UK Treasury Department, created a working group to study the possibilities of the state cryptocurrency and assess its risks for the financial industry.
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