The United Kingdom has recently announced that it will actively pursue working on the design of its central bank digital currency aka Digital Pound, also popular as Britcoin. The UK believes that these measures will be essential to align with the evolving technology of digital currency.
UK Advocates Further Study on Digital Pound
In a joint statement, the UK Treasury and the Bank of England have emphasized the need for additional examination regarding the potential implementation of a Central Bank Digital Currency (CBDC), commonly referred to as “Britcoin.” The decision to conduct further studies underscores a cautious approach by British authorities as they weigh the implications of such a digital currency.
Addressing concerns surrounding privacy and security, the authorities aim to assuage fears, particularly in light of a public backlash that has, in part, been fueled by various conspiracy theory groups. The move signals a commitment to addressing public apprehensions and ensuring that any potential CBDC development happens with careful consideration of these crucial aspects. Speaking on the development, Bim Afolami, economic secretary to the Treasury, said:
“We are at an exciting time of innovation in money and payments, and we want to ensure the UK is ready should a decision to build a digital pound be taken in the future. We will always ensure people’s privacy is paramount in any design, and any rollout would be alongside, not instead of, traditional cash.”
The Bank of England (BOE) also stated that the design efforts will focus on assessing feasibility and potential design options. After completing the design stage, the BOE and the government will decide whether to proceed with the development of a digital pound.
If the decision is affirmative, they will establish a timetable for additional consultations on legislation and a potential launch. It was confirmed that the introduction of primary legislation would be necessary for the implementation of a digital pound. Before this legislation makes way to Parliament, there will be further consultations.
UK Lawmakers Express Skepticism Over CBDC Development
The progress in developing a potential Central Bank Digital Currency (CBDC) has faced skepticism from UK lawmakers and raised concerns among the public.
The Treasury Committee, a cross-party parliamentary group, issued a warning last month, expressing uncertainty about whether the benefits of a CBDC would outweigh potential risks. Of particular concern is the fear that a transition to CBDCs could trigger bank runs, as consumers may turn to a digital pound as a safe haven during times of crisis. Privacy concerns have also been amplified by certain conspiracy theory groups, despite Bank of England (BOE) Governor Andrew Bailey’s previous assurances that such concerns are inconsistent with the intended approach.
In response to these apprehensions, both the BOE and the government have acknowledged the importance of privacy in CBDC development. They emphasized that the digital currency system would not grant access to users’ personal data, and any legislation introduced for a digital pound would need to prioritize protections ensuring users’ privacy and control over their funds.
Currently, cash stands as the sole form of state-issued money available to consumers. The BOE aims to guarantee Britons access to a form of “public money” explicitly backed by the government. This initiative comes in the context of the existing system where money deposited in banks represents a commitment from a private entity to deliver pounds.
The BOE contends that the issuance of digital forms of money is crucial for facilitating online transactions, providing people with alternatives to what it refers to as “private money.” The ongoing discussions and responses to concerns underscore the complexities surrounding the potential introduction of a CBDC in the UK.
