Key takeaways:
- The House of Commons Parliamentary Committee has requested that more consultations be conducted to ascertain the advantages of introducing a digital pound.
- Numerous advantages in terms of issuance, dissemination, and privacy, among other things, were brought to light by the current testing of an English CBDC.
The House of Commons Parliamentary Committee has requested the Bank of England and the Treasury in the United Kingdom to conduct more consultations in order to ascertain the advantages of introducing a digital pound.
According to a House of Commons Treasury Committee report, the Bank of England and Treasury incurred high costs for the groundwork and testing associated with the launch of a central bank digital currency (CBDC).
It suggested adding a distinct line item to its annual report and accounts starting in 2024 to reflect the costs associated with CBDC projects in order to increase transparency:
“It is important that the Bank of England and Treasury keep control of these costs to avoid spending more than necessary on a digital pound that might not proceed to being built.”
Numerous advantages in terms of issuance, dissemination, and privacy, among other things, were brought to light by the current testing of an English CBDC. But the committee worries that a formal launch will require a significant financial outlay, saying that:
“It is not clear to us at this stage whether the benefits are likely to outweigh these risks.”
The committee requested that England’s central bank refrain from speculating on the idea that “a digital pound can fix problems it can’t” and make sure that the fiat economy’s precedent of financial exclusion is not exacerbated by a digital pound.
Though HM Treasury and the Bank of England agree that a digital pound is necessary in the future, they are not yet ready to commit to building the essential infrastructure.
The choice to move on with the digital pound’s debut after the design stage may be influenced by factors such as the decline in the use of paper money, the appearance of new privately issued digital money alternatives, and global advances in CBDC.
