The UK is planning to launch a Central Bank Digital Currency that will replace the traditional old currency. The UK is currently the Head of the G7 group and one of the world’s most economically advanced countries. The country is currently working to introduce a CBDC other than cryptocurrency that can be regulated by the government and is likely to be less affected by the market conditions just like traditional currency.
What is CBDC?
A CBDC or Central Bank Digital Currency is a digital currency that the government of the UK government is thinking to introduce. This currency is not a decentralized currency but will be controlled by the central government. The main agenda behind this is to minimize the risk of depreciation in the currency by using digital money as the world is now preferring to go digital. This digital currency will be regulated by the Bank of England, the central bank of the UK, and will be stored in digital form on a computer or any similar device. People could use this currency for making payments and buying anything, unlike cryptocurrency.
The best and most innovative feature of this digital currency is that it is programmable. The word is used here because digital money is a kind of voucher that will let you buy only specific things, like a voucher that is redeemable only for a specific thing. For example, if in a month you have already bought a specific quantity of a particular product then you will not be able to buy the product. Because CBDC won’t let you buy that. You can also call it controlling money, which controls your purchases and spending. The product can be anything like food products, groceries, and everything. This is kind of inspired by the Chinese Social Credit System.
Reason for introducing CBDC
After the financial crisis of 2008, the economy has been affected badly and people were in debt. So, to fight this kind of situation this method could help in the future as this will restrict the users to spend much on things. And on the other hand, the paper currency is becoming worthless day by day and it is also coming to an end. The Fed wants to raise the interest rate and increasing this will ultimately lead to an increase in debt and normal people of the country will suffer. After 2008 when people have already suffered and still suffering, and this will be a bad idea to give them more problems. So to tackle this problem the Chancellor of the Exchequer Rishi Sunak told this whole idea to launch a currency called CBDC with his team. You can watch the video on youtube where he is talking about CBDC. The government is also promising to provide cash to the public till the time they want and circulate the digital currency along with it. It is the way to reshape the country’s economy according to Rishi Sunak.