The UK Parliament’s Treasury Committee has raised concerns about the necessity of introducing a state-backed digital pound, commonly referred to as ‘Britcoin.’ The influential committee has urged the Bank of England (BOE) to exercise caution, citing potential risks to the banking system and individual privacy that may outweigh the benefits.
The committee’s report, provocatively titled “Still a Solution in Search of a Problem?” questions the rationale behind the BOE’s efforts in developing a Central Bank Digital Currency (CBDC). While acknowledging the growing shift towards online transactions, the committee emphasizes the need to carefully consider risks associated with digital currencies.
Privacy concerns and fears of potential bank runs have fueled skepticism among lawmakers and conspiracy theory groups. The report highlights significant risks and challenges, calling for a more cautious approach to limiting individuals’ digital pound holdings. The proposed £10,000 to £20,000 ceiling aims to mitigate the risk of consumers favoring CBDCs over traditional bank deposits during times of crisis.
UK Lawmakers Question Whether ‘Britcoin’ Digital Pound is Needed, as MPs warn Britcoin could cause severe financial damage pic.twitter.com/e3LrtRU82N
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Harriett Baldwin, chair of the Treasury Committee, emphasized the importance of clear evidence demonstrating the benefits of a retail digital pound without compromising the UK economy’s stability. The BOE and the Treasury are actively studying the development of a CBDC, with a final decision expected no earlier than two to three years. The report urges officials to consider interest payments on CBDCs and enact legislation to ensure robust privacy safeguards for the digital pound.
This follows a critical report by the House of Lords Economic Affairs Committee last year, stating, “We have yet to hear a convincing case for why the UK needs a retail CBDC.” The debate continues as the UK navigates the evolving landscape of digital currencies.
