FreeCryptoCurrency.Me

The UK’s Treasury and the Bank of England are preparing the groundwork for a potential central bank digital currency to launch this decade, with a report on the issue to be published on Tuesday morning, according to an announcement from the British government. 

Coming just a few days after the UK government released its report on broader crypto regulation calling for input from stakeholders, this consultation outlines more details about what a digital pound may entail, while seeking public comment.

UK Economic Secretary to the Treasury Andrew Griffith promised the report last month, while also looking to assuage privacy concerns that a digital pound would not track retail transactions. However, the UK government and Bank of England have said that although they would not program or track spending, the digital pound would not be anonymous, so as to prevent money laundering.

A retail CBDC with spending caps

A digital pound would allow retail users the possibility to make payments using central bank-backed digital currency, but it will not offer saving or investing possibilities through a central bank account. On top of that, there will be limits on how much a person or company can hold in private digital wallets for the digital pound. 

The European Central Bank is taking a similar approach in its digital euro design phase, by introducing restrictions on storage and transactions. However in the UK, this feature is bound to change in the future. 

“This would strike a balance between both encouraging use and managing risks, such as the potential for large and rapid outflows from banking deposits into digital pounds,” the Treasury announcement reads. 

Long-term consideration

The consultation will remain open until June 7 while the Treasury will start designing the necessary technology and policies, though a digital pound remains far from certain for widescale introduction. 

“While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible and easy to use,” Chancellor of the Exchequer Jeremy Hunt said in the announcement. “That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”

The government will only make a decision on whether to implement the CBDC around 2025, with a potential launch it further down the line. 

“This consultation and the further work the bank will now do will be the foundation for what would be a profound decision for the country on the way we use money,” Governor of the Bank of England Andrew Bailey said.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.