UK lawmakers have urged caution over the introduction of a retail digital pound.
UK lawmakers are urging a cautious stance on the introduction of a retail digital pound. They emphasize the importance of finding a balance between technological advancements and potential drawbacks.
Members of the Treasury select committee have expressed doubts about the feasibility of launching a retail digital pound, emphasizing the need for careful consideration before implementation. Despite recognizing the potential benefits in terms of innovation, the Committee urged the Bank of England and the Treasury to thoroughly assess the need for such action, taking into account both the costs and risks involved.
Meanwhile, the committee’s report recommends imposing a lower initial limit on the value of retail digital pounds to mitigate potential bank operating risks amid market instability. This specific precautionary measure aims to prevent deposits from being transferred to digital wallets, which could increase the risk of bank failure and increase borrowing costs.
Addressing privacy concerns, the report recommended that any legislation introducing a digital pound should severely limit the use of data by the government or the Bank of England. The Commission emphasized the importance of protecting user privacy and ensuring that the digitization of currency does not enable unwarranted surveillance.
The report suggests that if legislation to introduce a digital pound is enacted, the government and the Bank of England should explicitly restrict the use of data obtained through the digital pound for purposes other than those already authorized for law enforcement.
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Committee chair Harriett Baldwin emphasized the need for strong evidence before considering the introduction of a retail digital pound. She stressed that clear evidence was needed to show that the implementation of the scheme would benefit the UK economy without increasing risks or creating unmanageable costs, and that the decision to integrate it into the financial system was based on these factors. argued that it should depend on a comprehensive evaluation of
British lawmakers have backed the Bank of England’s current design efforts, while calling for transparency about the project’s costs. Baldwin emphasized the need for a concise cost-benefit analysis to ensure that the introduction of retail digital pounds is consistent with wider economic stability and financial inclusion goals.
Meanwhile, investment managers in the UK are receiving regulatory support to move away from traditional record-keeping systems and leverage blockchain technology to tokenize their funds.
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