The United Kingdom Parliamentary Committee, House of Commons, has asked the Bank of England and Treasury to carry out further consultative work to determine the benefits of launching a digital pound.
The groundwork and tests related to the launch of a central bank digital currency (CBDC) incurred significant costs for the Bank of England and Treasury, according to a House of Commons Treasury Committee report. It recommended greater transparency around the costs incurred around CBDC initiatives by having a separate line item in its annual report and accounts from 2024 onwards:
“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.”
The ongoing tests of an English CBDC highlighted numerous benefits concerning issuance, distribution and privacy, among others. However, the committee fears that an official launch will demand a significant investment, adding that “It is not clear to us at this stage whether the benefits are likely to outweigh these risks.”
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The committee asked England’s central bank to avoid speculating that “a digital pound can fix problems it can’t” and to ensure that a digital pound does not worsen the financial exclusion precedent set by the fiat economy.
While the Bank of England and HM Treasury see the need for a digital pound in the future, committing to build the infrastructure for one requires further preparatory work. Factors involving the reduced use of paper money, the emergence of new forms of privately issued digital money, and international developments in CBDC will potentially influence the decision to proceed with the launch of the digital pound following the design phase.
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