Tuesday, February 27, 2024
HometreasuryUk parliamentary committee calls for further work on benefits of digital pound

Uk parliamentary committee calls for further work on benefits of digital pound

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UK Parliamentary Committee Calls for Further Consultative Work on Launch of Digital Pound

The United Kingdom Parliamentary Committee, House of Commons, has called on the Bank of England and the Treasury to carry out additional consultative work to determine the benefits of launching a digital pound. The committee’s request comes after the Bank of England and Treasury incurred significant costs during the groundwork and tests related to the launch of a central bank digital currency (CBDC).

In a report, the House of Commons Treasury Committee recommended greater transparency around the costs associated with CBDC initiatives. It suggested that the Bank of England include a separate line item in its annual report and accounts from 2024 onwards to provide a clearer picture of the expenses involved. The committee emphasized the importance of controlling costs to avoid unnecessary spending on a digital pound that may not ultimately be built.

While ongoing tests of an English CBDC have highlighted various benefits, including improved issuance, distribution, and privacy, the committee expressed concerns about the potential investment required for an official launch. It stated that it is currently unclear whether the benefits of a digital pound would outweigh the risks.

The committee also urged the Bank of England to be cautious about making claims that a digital pound can solve problems that it cannot. Additionally, it emphasized the need to ensure that a digital pound does not exacerbate the financial exclusion seen in the fiat economy.

Both the Bank of England and HM Treasury acknowledge the need for a digital pound in the future but believe that further preparatory work is necessary before committing to building the required infrastructure. Factors such as the declining use of paper money, the rise of privately issued digital currencies, and international developments in CBDC will play a role in the decision-making process following the design phase.

The call for additional consultative work reflects the cautious approach being taken by the UK government and financial authorities regarding the adoption of a digital pound. Despite recognizing the potential benefits, a thorough assessment of costs and risks is crucial to inform the decision-making process.

The committee’s recommendations for greater transparency and cost control demonstrate its commitment to responsible financial governance. By ensuring that the costs associated with a digital pound are properly accounted for, the government and central bank can make informed decisions that benefit the UK economy and its citizens.

As the debate over the digitalization of currencies continues, it is clear that careful consideration must be given to the potential implications and risks involved. The UK remains at the forefront of exploring the possibilities of a digital pound, but it is essential to strike the right balance between innovation and responsible financial management.

More detail via Cointelegraph here… ( Image via Cointelegraph )

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