BritCoin vs BitCoin: Central banks stepping into the digital currency arena

By Jim Bulling and Michelle Chasser

Certain governments around the world are exploring the possibility of central bank issued digital currencies using distributed ledger technology (DLT) which could compete with private digital currency systems such as BitCoin.

Following the release of the Bank of England’s (BofE) paper on central bank issued digital currencies, the Deputy governor of monetary policy appeared before the House of Lords’ Economic Affairs Committee to discuss the effect ‘BritCoin’ would have on the economy. The BofE has previously raised the possibilities of using BritCoin for retail transfers and issuing interest bearing accounts or ‘wallets’ to hold BritCoins.

The Bank of Canada (BofC) and some of Canada’s biggest banks have already been experimenting with a central bank issued digital currency, CAD-Coin, for interbank payments using a DLT. Canadian dollars are exchanged for CAD-Coins on a one for one basis which can then be used on a blockchain platform owned and controlled by the BofC. Once CAD-Coins are redeemed for Canadian dollars the BofC has the ability to destroy the CAD-Coin rather than reissue it. However, there is currently no intention to make CAD-Coin available to the general public.

The People’s Bank of China has announced that it will work towards issuing a national digital currency as soon as possible. Unfortunately, no details have been released since the initial announcement in January.

However, other central banks seem content to watch these developments for the time being. The Reserve Bank of Australia’s (RBA) Head of Payments Policy Department has stated that while the RBA was not actively considering it “in the more distant future it is even possible that we may we see a digital version of the Australian dollar”.