Cryptocurrencies

Treasury written question – answered on 6th September 2021.

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Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

To ask the Chancellor of the Exchequer, whether the Government has made an assessment of the potential merits of introducing a sterling- based stable coin in the UK.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

The Government launched a consultation on its regulatory approach to cryptoassets and stablecoins on 7 January. This set out the view that stablecoins, which seek to stabilise their value, could be used as widespread means of payment and potentially deliver improvements in cross-border transactions. At the same time, depending on scale and nature of use, these developments could pose similar financial stability and consumer risks as traditional regulated payment systems.

The Government’s proposed approach would make sure stablecoins meet the same high standards we expect of other payment methods. The Government is considering responses and will outline next steps in due course. Any steps taken in light of this consultation will aim to balance the potential risk to consumers with the ambition to foster competition and innovation in the sector.

Alongside this, the UK, like many countries globally, is actively exploring the potential role of central bank digital currencies: an electronic form of central bank money that could be used by households and businesses to make payments. The Bank of England published a discussion paper in March 2020, which considered the possibility of a retail central bank digital currency.

At Fintech Week 2021, the Chancellor announced a new Taskforce led by HM Treasury and the Bank of England to lead the UK’s exploration of a central bank digital currency, with separate forums to engage civil society and technology experts. The Taskforce aims to ensure a strategic approach is adopted between the UK authorities as they explore a central bank digital currency, in line with their statutory objectives, and to promote close coordination between them. The Government and the Bank of England have not yet made a decision on whether to introduce a central bank digital currency in the UK, and will engage widely with stakeholders on the benefits, risks and practicalities of doing so.

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