With the UK’s exit from the European Union (EU), the government says it’s looking towards stablecoins, central bank digital currencies (CBDCs), and other emerging financial technology innovations.
London’s place as a strategic global financial launchpad is expected to face significant strain following the UK’s withdrawal from the EU. Consequently, the country’s government will look inwards to devise strategies to maintain its competitiveness in the global financial scene.
Harnessing the Benefits of Stablecoins and CBDCs
Speaking on Nov. 9, Chancellor of the UK Treasury Rishi Sunak remarked that Brexit offered a new chapter in the history of the country’s financial services industry. According to Sunak, the government plans to harness the potential benefits of novel technologies like stablecoins and CBDCs.
For Sunak, stablecoins and CBDCs could provide a robust architecture for cheaper and more efficient payment processing networks. Thus, the UK government plans to ensure the creation of suitable regulations to cover these alternatives.
The Bank of England will reportedly oversee any future stablecoin and CBDC regulations as part of the apex bank’s insistence on controlling Britain’s financial regulations post-Brexit.
The comments by the Chancellor of the Exchequer come amid fears of a possible economic stagnation following the finalization of the Brexit withdrawal and the fallout of the ongoing coronavirus pandemic. Back in March, the government pledged almost $400 million in relief funds to businesses across the UK.
Read more about my ambition for the future of UK financial services here: https://t.co/ImxtoChxYw
— Rishi Sunak (@RishiSunak) November 9, 2020
To compensate for any reduced economic activity with the EU, Sunak says the country is moving towards establishing greater ties with Switzerland, India, and Japan. According to the Wall Street Journal, the UK Treasury Chief expects a significant reduction in the financial services interaction with the EU.
Indeed, wary of any Brexit-induced dislocation, some financial firms either moved out of the UK or established offices in EU-member states to continue offering services on the continent.
Promoting “Green” Finance
Apart from stablecoins and CBDCs, the UK government is also reportedly championing an increased focus on green finance. According to Suna, finance companies in the country will have to comply with more robust environmental disclosure rules.
As previously reported by BeInCrypto, the New York Department of Financial Services (NYDFS) also sounded a similar warning to crypto companies. At the time, the regulator expressed plans to demand more rigorous climate change management risks from regulated financial institutions in the state.