The Bank of England (BoE) is reconsidering its plan to launch a central bank digital currency (CBDC), as questions grow over whether it would benefit the public or the financial system.
People familiar with the matter told Bloomberg on July 22 that the central bank is exploring other options and has been encouraging commercial banks to improve their own payment services instead of relying on a CBDC.
Governor Andrew Bailey shared his view during the Treasury Committee’s parliamentary hearing on July 22 that he would need “a lot of convincing” to advance if private banks can meet customer needs through innovation.
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In 2023, Bailey stated that the BoE and the Treasury considered it “likely a digital pound will be needed in the future”. However, public pushback and political criticism have cast doubt on the idea.
More than 50,000 people responded to a consultation on the project, most expressing concerns about privacy and the risk of harm to the banking system.
Several lawmakers have also raised objections. They warned a CBDC could make it easier for customers to withdraw funds quickly during crises. There have also been calls for stronger safeguards to protect personal data if the plan moves ahead.
The Atlantic Council, which monitors CBDC projects worldwide, still lists the UK’s plan as “in development”, though it lags behind some other countries.
Recently, South Korea’s plans to expand testing of a CBDC have been put on hold. What happened? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.
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