The Prime Minister, who has stated his ambition to make the UK a global hub for crypto asset technology, was earlier this year forced to drop plans to make a non-fungible token (NFT) for sale through the Royal Mint, less than 12 months after the project was first announced.
UK Finance, which represents more than 300 financial services businesses across the country, warned in a submission that Britcoin was “likely to trigger concerns about privacy and state interference” if widely adopted, including for salary payments.
It described initial limits by the Bank of between £10,000 to £20,000 as excessive, adding the proposed figures would “introduce significantly more risks to financial stability than benefits”, particularly in times of crisis.
While digital currencies could pose a threat to the traditional funding sources of high street lenders, UK Finance argues that a lower limit of between £3,000 and £5,000 better reflects consumer spending habits, highlighting that the average person spent just £89 per month in cash in 2021 and £1,053 on debit cards.
A lower limit would comfortably cover average monthly expenditure while reducing financial stability risks, UK Finance said.
However, others believe that a digital pound should be as flexible and usable as cash. The Payments Services Regulator (PSR), which oversees all the main systems in the UK including those used for salaries payments, cheques, Mastercard and Visa, said Britcoin should act as an asset of last resort enabling people to shift money into digital pounds quickly in the event of a financial crisis.
