UK unveils plans for regulating stablecoins and launching a CBDC
- This development comes as a response to the country’s departure from the EU.
- The UK seeks to achieve a net-zero economy by offering a well-regulated market.
- Per Rishi Sunak, stablecoins have the potential to change how people store and exchange money.
The UK Treasury Department is working on a draft to regulate privately-owned stablecoins. The department disclosed this news on November 9 through an official announcement, noting that it is also researching how it could use a Central Bank Digital Currency (CBDC) as an alternative to cash. Reportedly, this move comes as the UK government strives to find the best framework for financial services after the country left the EU earlier this year.
In the publication, Rishi Sunak, the chancellor of the UK’s Treasury Department said,
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“We are starting a new chapter in the history of financial services and renewing the UK’s position as the world’s pre-eminent financial centre. By taking as many equivalence decisions as we can in the absence of clarity from the EU, we’re doing what’s right for the UK and providing firms with certainty and stability. Our plans will ensure the UK moves forward as an open, attractive and well-regulated market, and continues to lead the world in pioneering new technologies and shifting finance towards a net zero future.”
Sunak went on to note that financial services are a key enabler in the push for a net-zero economy. As such, the chancellor highlighted new suggestions that might help underpin sustainable financial flows while establishing the UK’s global leadership in green finance as the country prepares to host the United Nations Climate Change Conference (COP26) in 2021. These suggestions include issuing the first Sovereign Green Bond in 2021, introducing stronger environmental disclosure standards, and implementing a green taxonomy, among others.
Pushing to become a leader in financial technology
According to Sunak, the UK has been a pioneer in financial services for a long time and will continue spearheading technological innovation in the sector. With respect to this, the chancellor said that new technologies such as stablecoins could revolutionize the way people store and exchange their funds. Through incorporating the use of stablecoins in financial systems, Sunak believes payments could become faster and cheaper.
He went on to note,
“To harness the potential benefits of stablecoins, whilst managing risks to consumers and financial stability, the Government will propose a regulatory approach for relevant stablecoin initiatives that ensures they meet the same minimum standards we expect of other payment methods.”
Sharing the UK’s take on the ongoing global conversation regarding Central Bank Digital Currencies (CBDCs), the chancellor welcomed work by HM Treasury and the Bank of England to weigh whether and how central banks can issue CBDCs to complement cash.