Could a digital pound accelerate Britain’s growth post-Brexit and retake London’s status as the European financial hub?
A financial think tank has suggested that Britain should adopt a digital pound in an effort to strengthen London’s status as a global trade center in the wake of Brexit. Previously the gravitational center-point of Europe’s financial sector, London saw much of its influence lost at the end of 2020 when Britain’s exit from the European Union was finalized.
The United Kingdom’s Finance Ministry will now take proposals on how to make the City of London more attractive to global traders and pull activity back from Amsterdam, which emerged as the new EU trading hub post-Brexit.
Euro-skeptic politicians and London finance veterans have formed CityUnited, a think-tank that is proposing ideas on how to foster growth in an independent Britain. CityUnited chairman Daniel Hodson told Reuters that the Bank of England’s consideration of a central bank digital currency was commendable but that the process should be accelerated.
“The Bank of England is talking about a CBDC but it ought to be a greater priority as this form of technology is the future, and would bring other benefits like real-time regulation to cut costs,” said Hodson.
The progress made by China in launching a CBDC should worry British finance authorities, said Hodson, who warned that such technology could “steal a long march” on the United Kingdom. Hodson said:
“A central bank digital currency (CBDC) should be a fundamental foundation for a competitive City after Brexit, otherwise China will steal a long march on us.”
China’s progress in creating a CBDC has seen the issuance of biometric passports linked to digital yuan wallets, along with numerous similar pilot projects, as the nation edges closer to issuing its CBDC. Although not the first country to issue a CBDC — that honor goes to the Bahamas — the global economic impact of a Chinese CBDC could stand to be much greater.
Expected to power China’s digital, cashless cities at some point in the near future, the digital yuan will also reportedly be used as part of the Beijing Winter Olympic Games in 2022.