The UK Government and Central Bank are drawing attention to the criteria they have set for a potential digital currency initiative. The progress of the UK’s planned central bank digital currency (CBDC) became clearer with a joint statement made by the Treasury and the Central Bank on January 25. In this statement, it was emphasized that there is no final decision yet on the implementation of a digital pound, and the current situation is at the stage of evaluating the design and feasibility of this new currency.
Officials stated that they are working on a set of criteria and an evaluation framework to measure the impact of the CBDC on the national economy. According to the statement of the Treasury and Central Bank,
“The design phase will deepen our understanding of how to design a digital pound that maximises opportunities whilst mitigating risks and aims to develop a robust evidence base to inform a decision later this decade as to whether, or not, to proceed to launch.”
Harriet Baldwin, the Chair of the Treasury Committee, emphasized that the digital pound is an important technological step and should only be implemented if it provides more benefits than risks.
Privacy Concerns and Protection of User Data
The UK Government and the Bank of England have responded to privacy concerns regarding this new currency. In a joint statement, it was pointed out that users’ privacy will be protected by legal regulations and that law enforcement will only have access to this information on fair and legal grounds.
“If a digital sterling is introduced, strong privacy protections will be vitally important.”
This statement implies that neither the Bank of England nor the Treasury will have access to user data in the event of the issuance of a retail CBDC.
Commitment to Protecting Access to Cash
The UK Government and Central Bank also emphasized their commitment to maintaining access to cash in the event of issuing a CBDC. The statement said,
“A digital pound would complement, not replace, cash. The Government and the Bank have a clear commitment to maintain access to cash for those who want to use it.”