Bank of England, Treasury commit to user privacy for potential CBDC
While no decision on the digital pound has been made, the BOE and Treasury continue to work on it
Bank of England Governor Andrew Bailey | IMF Photo/Cliff Owen/"Inflation Dynamics in a Fragile Global Economy" (CC license)
The Bank of England and the UK Treasury are moving forward with their planning process for a potential digital pound.
However, this doesn’t mean that the UK will begin implementing a central bank digital currency (CBDC). According to a press release, the government will continue to examine how a digital pound would interact with consumers and how it could be incorporated into the UK economy.
Before the Bank or the Treasury move forward with any prospective launch of a digital pound, they would seek further public consultation and would introduce legislation to protect user privacy.
Read more: The Bank of England is looking to build a digital pound
“Trust in all forms of money is an absolute necessity. We know the decision on whether or not to introduce a digital pound in the UK will be a major one for the future of money,” Shara Breeden, deputy governor for financial stability, said.
The digital pound — also referred to as Britcoin — would “give people more choice in how they make everyday payments,” according to the BOE. And, as expected, the CBDC would reflect the same amount, so one digital pound would be equivalent to an actual pound.
The Financial Conduct Authority is currently mulling how it’ll protect cash, and plans to publish a new regulatory framework this summer.
Read more: Even the Bank of England is part of a shift to blockchain use cases
There would be limits set on how much both individuals and businesses could hold, “at least initially.”
Consumers could use the digital pound to make purchases, and would be able to access the CBDC through a wallet. The wallets would be “offered to the public and businesses by the private sector.”
The Bank of England believes that there’s an increasing demand for a digital currency, noting that “digital payments are becoming more common.”
“There are also new forms of money and new technologies on the horizon. These could help make it easier or quicker to buy the things we want. But some of these could pose risks to the UK’s financial stability,” the BOE said.
The UK has been researching a CBDC over the past couple of years. Members of the House of Commons Treasury Committee expressed concerns about the impact a CBDC could have on financial stability back in December.
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