LONDON (Reuters) – The digital pound should be at the center of the UK’s efforts to bolster the City of London’s global appeal as a post-Brexit financial center, the CityUnited Project think tank said Friday.
The Treasury Department is to lay out proposals to improve the attractiveness of the UK capital market after Amsterdam turned London to become the main hub for stock trading in Europe after the city was cut off from the European Union on December 31.
CityUnited chairman Daniel Hodson said the city now has a “huge majority” who believe it is better to focus on improving the competitiveness of the financial sector than to postpone change in the hope of gaining access to the EU.
“The central bank digital currency (CBDC) must be the foundation of a competitive post-Brexit city, or China will steal the long way from us,” Hodson told Reuters.
China plans to use its digital yuan at the 2022 Winter Olympics in Beijing.
“The Bank of England is talking about CBDC, but this should be a higher priority as this technology is the future and will bring other benefits such as real-time regulation to reduce costs,” Hodson said.
The Bank of England did not give a timeframe for any decision.
CityUnited, founded by euro-skeptic politicians and veteran City Hodson, former chief executive of the London Futures Exchange, now part of ICE, has provided 24 recommendations for reforming financial services.
They have just been presented to a UK government working group set up by Prime Minister Boris Johnson this month to use Brexit freedoms to reduce bureaucracy and spur growth.
The digital pound will allow you to spend and track shares of the currency without costly overhead costs, helping to collect and distribute taxes in real time, and create more effective market control in real time, according to CityUnited.
Regulators should also be required to maintain the attractiveness and openness of UK markets and encourage the development of “parallel markets” for trading euro-denominated products outside of the block for international investors, he added.
Hugh Jones’ reporting; editing by Jonathan Oatis