Digital pound backs post-Brexit City of London recovery

Photo: AP

All efforts to restore the role UK’s capital as key global finance centre should be focused on digital upgrade of transactions and payment methods. The British capital is loosing a major share of finance and stock market business after Brexit came in effect. Leading think-thanks emphasized on the role of the digital pound as a tool to facilitate a transition to more advanced transaction practices, Reuters reported.

The UK finance ministry is expected to set out proposals for making Britain’s capital market more attractive after Amsterdam toppled London to become Europe’s top share trading centre after the City was cut off from the European Union at end-2020.

CityUnited said there is now a “swelling majority” in the City that believes it was better to focus on making the financial sector more competitive rather than delaying change in the hope of getting EU access. A central bank digital currency (CBDC) should be a fundamental foundation for a competitive City after Brexit, the think-thank said. Otherwise, China will steal a great portion of the business activity. China is planning to put its digital yuan to use at the 2022 Winter Olympic Games in Beijing. 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. A digital pound would allow fractions of a currency to be spent and traced without costly overheads to help collect and distribute taxes in real time, and spawn more efficient, real-time supervision of markets, CityUnited said. Regulators should also be required to maintain the attractiveness and openness of UK markets, and foster the development of “parallel markets” for trading euro-denominated products outside the bloc for international investors, it added.

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