The UK government is taking a cautious approach to the design phase of its Central Bank Digital Currency (CBDC), underlining a firm commitment to privacy and maintaining access to cash. This meticulous approach, revealed in a January 25 response to the Treasury Committee, demonstrates a desire to strike a balance between technological innovation and societal concerns.
Exploring the possibilities of CBDC
The government has not yet taken a final decision on the launch of the digital book, but is actively investigating the feasibility and various designs of a CBDC. This design phase aims to deepen understanding of how to maximize opportunities while mitigating risks, with a view to making an informed decision later in the decade.
A comprehensive evaluation framework is being developed to determine the viability of this national digital asset project. This framework will set out the key criteria to be met to ensure successful implementation of the digital currency.
Security and privacy come first
Concerns about user privacy are at the heart of the discussions. The British government promises to guarantee user confidentiality through concrete legal measures. In addition, law enforcement agencies’ access to users’ personal information would be strictly limited and subject to a fair and legal basis.
In the case of a retail launch of CBDC, neither the Bank of England nor the UK Treasury would have access to user data, providing additional privacy protection.
Maintaining access to the species
In addition to privacy issues, the government and the Bank of England insist on their commitment to preserving access to cash. They clearly state that the digital pound would complement, not replace, cash, preserving payment choices for all citizens.
The UK’s cautious approach to developing a digital pound highlights a balanced effort to integrate technological advances while respecting fundamental aspects of privacy and access to traditional financial services. The project, while promising, is part of a considered approach to harmonizing digital progress and societal values.
