Digital variants of the Pound Sterling are on the horizon. Whether in the form of a stablecoin, or a Central Bank Digital Currency (CBDC), private companies and governments alike have recognized the merits behind these assets.
Bank of England (BoE) – CBDCs
To date, the Bank of England (BoE) has remained steadfast in its belief that digital assets such as Bitcoin have no intrinsic value. While this belief may remain, it has also accepted a future in which digital currencies are commonplace and beneficial – specifically those issued by central banks. Recently, Bank of England Governor, Andrew Bailey, made the overall goal of the BoE clear.
“We want the banking system to support the economy not the other way around.”
In a speech by Deputy Governor of Financial Stability, Sir Jon Cunliffe, he made it clear that a CBDC will be pivotal in achieving this goal.
“We may not be there yet. But it looks probable in the UK that if we want to retain public money capable of general use and available to citizens, the state will need to issue public digital money that can meet the needs of modern day life.”
While the BoE continues development of its CBDC, others are working hard to develop their own digital variant of the Pound Sterling, as alluded to by Cunliffe.
“There are, however, on the near horizon newer technologies and innovations, such as tokenization and distributed ledger, which may further transform the money we use. ‘Stablecoins’, a form of crypto-assets are probably the best known of these.
Their proponents claim that these have the potential radically to reduce the costs of digital money and to increase its ‘functionality’, the ‘things it can do’, embedding money much more deeply into the digital world in ways we can only now imagine.
The proponents of these newer forms of money are typically not banks but technology companies including the so called ‘Big Tech’ internet platforms.”
One such company is Stratis, and its just announced stablecoin known as the Great British Pound Token (GBPT).
The announcement of GBPT is simply another step by Stratis in rounding out its suite of services which recently underwent a major restructuring as the company replaced its long-standing STRAT tokens with the new and improved STRAX.
These new STRAX tokens, which were launched months ago, brought various new capabilities to the table – each of which are meant to service burgeoning sectors such as digital securities, and DeFi. Now boasting a token standard which can support the issuance of digital securities, Stratis believes that GBPT stands to compliment the protocol perfectly.
The Stratis team explains, “The need for a sterling backed digital currency such as GBPT is likely to grow as we start to see greater issuance of digitally issued equities and debt instruments. These digital securities will need to pay dividends and coupons (income) using digital currencies as opposed to using the traditional banking services as it will prove to be faster and cheaper to do so.”
To date, the vast majority of stablecoins have a foundation based on the U.S. dollar. While USD remains the worlds primary reserve currency – albeit with an increasingly tenuous grasp – this does not mean that there is no need for variants based on other world leading FIAT. Stratis is clearly looking to prove this with GBPT as citizens of the UK, and the BoE itself, become more comfortable with blockchain based currencies.
Development of such products/services is no doubt being aided by recent investments in the STRAX protocol by companies such as Alphabit.