UK Government Cautious of Digital Pound, Prioritizes Privacy and Cash Access

The U.K. Treasury and the Bank of England have highlighted certain criteria for the potential launch of a digital currency.

According to a response issued to the Treasury Committee on January 25, the U.K. government said it is cautiously moving forward with the design phase of a central bank digital currency (CBDC).

The government emphasized that no final decision has been reached on the launch of a digital pound, adding that its officials are still exploring the feasibility and design of a CBDC.Bitcoin mining

The regulator further said that it is setting standards and developing a comprehensive assessment framework to determine the feasibility of launching a national digital asset.

HM Treasury and the Bank of England stated that

“The design phase will deepen our understanding of how to design a digital pound that minimizes risk while maximizing opportunity, and aims to build a robust evidence base to inform a decision on whether to proceed with the launch of a digital pound later this decade.”

Harriet Baldwin, chair of the Treasury Committee, described the digital pound as a “major technology project” that should only be implemented if the benefits outweigh the risks.ETC mining

Privacy issues

The Bank of England and the Treasury have also addressed privacy issues associated with the currency.

According to the joint statement, the government will ensure user privacy through specific legal measures. In addition, access to users’ personal information by law enforcement agencies will be strictly limited and operated on a fair and lawful basis.

They wrote: “HM Treasury and the Central Bank agree that strong privacy protections are vital if the digital pound is to be introduced.”

The response also makes clear that neither the Bank of England nor HM Treasury will have access to user data if a decision is made to introduce a retail CBDC.

The committee chair said, “One of the main risks is the potential misuse of data, which is why we are recommending that privacy protections are included in primary legislation in the event of the introduction of a digital pound.”

Protecting access to cash

In addition, both government agencies emphasized their commitment to safeguarding access to cash if a CBDC is issued.

They said:

“The digital pound will complement, not replace, cash. The government and the central bank are clearly committed to providing access to cash for those who want to use it.”