This development is a reaction to the country’s withdrawal from the EU.
The UK is aiming for a net zero economy by offering a well regulated market.
According to Rishi Sunak, Stablecoins have the potential to change the way people store and exchange money.
The UK Treasury is working on a draft regulation of privately owned Stablecoins. The ministry announced this in an official statement on November 9 and said it was also looking into how it might use a Central Bank Digital Currency (CBDC) as an alternative to cash. The move is reportedly taking place as the UK government seeks to find the best framework for financial services after the country left the EU earlier this year.
In the publication, Rishi Sunak, the Chancellor of the Exchequer of the British Treasury, said
“We are opening a new chapter in the history of financial services and renewing the UK’s position as the world’s leading financial center. By making as many equivalence decisions as we can, without the EU providing clarity, we are doing what is right for Britain and providing security and stability for business. Our plans will ensure that the UK moves forward as an open, attractive and well-regulated market and continues to lead the world in introducing new technology and shifting finance towards a net zero future”.
Sunak continued that financial services play a key role in driving a net zero economy. The Chancellor therefore highlighted new proposals that could help underpin sustainable financial flows while consolidating Britain’s global leadership in green finance as it prepares to host the UN Climate Change Conference (COP26) in 2021. These proposals include issuing the first sovereign green bond in 2021, introducing stricter environmental disclosure standards and introducing a green taxonomy.
Urging for a leading role in financial technology
According to Sunak, the UK has long been a pioneer in financial services and will continue to lead the way in technological innovation in this sector. In this context, the Chancellor said that new technologies like Stablecoins could revolutionize the way people store and exchange money. By introducing Stablecoins into financial systems, Sunak said that payments could become faster and cheaper.
“In order to take advantage of the potential benefits of Stablecoins while managing the risks to consumers and financial stability, the government will propose a regulatory approach to relevant Stablecoin initiatives that ensures that they meet the same minimum standards we expect other payment methods to meet.
The Chancellor shared the view of the UK in relation to the ongoing global discussion on Central Bank Digital Currencies (CBDCs) and welcomed the work of the UK Treasury and the Bank of England to examine whether and how central banks can issue CBDCs to supplement cash.