“We are at an exciting time of innovation in money and payments, and we want to ensure the U.K. is ready should a decision to build a digital pound be taken in the future,” Bim Afolami, economic secretary to the treasury, said in a Thursday (Jan. 25) news release. “This is the latest stage in our national conversation on the future of our money — and it is far from the last. We will always ensure people’s privacy is paramount in any design, and any rollout would be alongside, not instead of, traditional cash.”
Supporters of the digital pound are hoping to have the currency in circulation by 2030, joining dozens of other countries working to introduce their own CBDCs.
The Bank of England and the treasury said Thursday they will continue preparations for the currency — now in the design phase — after hearing from more than 50,000 people during a public consultation, with many of them voicing privacy concerns. The statement said the legislation would guarantee users’ privacy and control.
“The bank and the government would not have access to any personal data, and users would have freedom in how they spent their digital pounds,” the release stated.
Despite these efforts, British lawmakers have questioned the need for a CBDC, with a House of Commons committee last month publishing a report titled “The digital pound: still a solution in search of a problem?” That report noted that while a digital pound has several benefits, there are also risks.
“One of the most commonly cited risks was that of ‘bank disintermediation’ — that is, the switching of deposits held with banks into digital pounds,” the report said. “In periods of financial market stress, the ability to rapidly and easily switch into digital pounds could accelerate the withdrawal of deposits from banks — a so-called ‘bank run’ — and thereby increase the risk of bank failures.”