Douglas Carswell – 2016 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Douglas Carswell on 2016-03-17.

To ask Mr Chancellor of the Exchequer, what planning his Department is undertaking on the collation of block chain data; and what discussions he has had with the Bank of England on that topic.

Harriett Baldwin

Digital currencies, and the distributed ledger technology that underpins them, have the potential to bring innovative services and products to UK customers and firms – particularly in areas like international transfers.

The Chancellor announced in March 2015 that the Government will bring digital currency exchange firms into regulation in the UK to help the legitimate industry flourish, and to create a hostile environment for illicit actors. We will publish proposals on this regulatory regime in due course.

As outlined in Deputy Governor, Ben Broadbent’s recent speech, the Bank of England is also exploring this emerging sector and the implications it could have for monetary and financial stability as part of its broader research agenda.

Separately, academics at University College London’s (UCL) digital currency research centre have also been looking at how the distributed ledger technology that underpins digital currencies could be harnessed by central banks. The Government is encouraged to see this research from one of the UK’s world-leading universities. However, this a theoretical paper by an independent institution, separate from the Bank of England’s work and from Government policy.

It is the Government’s ambition to foster the growth of legitimate digital currency firms as part of the wider FinTech ecosystem here in the UK. As part of this, the Government will consider the wider implications of a growing digital currencies sector for the financial services sector and the economy as a whole. Some parts of Government are also looking at how the benefits of distributed ledger technology can be harnessed to deliver greater innovation. However, the Government and the Bank of England do not currently have any plans to introduce a centrally issued digital currency.

The UK has been rated as having the world’s leading FinTech ecosystem in a recent global benchmarking exercise and attracted c. £524mn in investment in 2015.