Home Bitcoin UK Legislators urge caution in retail digital pound rollout

UK Legislators urge caution in retail digital pound rollout

UK Legislators urge caution in retail digital pound rollout

British legislators are urging a careful stance regarding implementing a retail digital pound. They stress the importance of finding an equilibrium between technological advancements and potential drawbacks. 

Members of the Treasury Select Committee have expressed reservations regarding the possible launch of a retail digital pound, underscoring the need for thoughtful examination before execution. Despite recognizing potential advantages in terms of innovation, the committee has urged the Bank of England (BoE) and Treasury to thoroughly assess the necessity of such a step, considering both associated costs and risks.

In the interim, the committee’s report recommends imposing lower initial limits on the value of retail digital pounds to alleviate the risk of potential bank runs amid market instability. This specific precautionary measure aims to deter significant transfers of deposits into digital wallets, which could heighten the risk of bank failures and elevate loan costs.

Screenshot of the Treasury Committee report   Source: UK Parliament

The report addressed privacy concerns, recommending that any legislation introducing a digital pound should strictly limit the use of data by the government or the BoE. The committee stressed the importance of protecting user privacy and ensuring that the digitization of currency does not enable unwarranted surveillance.

The report proposes that in the event of legislation for the introduction of a digital pound, it should expressly limit the Government and Bank of England from utilizing data acquired through the digital pound for purposes beyond those already sanctioned for law enforcement.

Related: UK crypto hodlers get a call from the tax grinch

Committee chair Harriett Baldwin stressed the need for compelling evidence before contemplating the introduction of a retail digital pound. She emphasized the requirement for clear proof that its implementation would benefit the UK economy without escalating risks or incurring unmanageable costs, asserting that the decision to integrate it into the financial system should hinge on a comprehensive evaluation of these factors.

While endorsing the Bank of England’s current design efforts, UK lawmakers urged transparency regarding project costs. Baldwin emphasized the need for a concise cost-benefit analysis to ensure that introducing a retail digital pound aligns with broader economic stability and financial inclusion goals.

Meanwhile, Investment managers in the United Kingdom are receiving regulatory support to leverage blockchain technology to tokenize funds, breaking away from conventional record-keeping systems.

Magazine: This is your brain on crypto: Substance abuse grows among crypto traders