- A House of Lords committee has concluded that there is no conclusive evidence, which states the need for a CBDC for UK.
- According to a report published, UK’s Economic Affairs Committee hinted that while there are advantages of CBDCs, it could at the same time challenge the basic financial system and protection of individuals' privacy.
- The recent House of Lords committee felt that although CBDC are inevitable at the time it holds more challenges than solutions
In November 2021, the HM Treasury and the Bank of England organised a series of consultation meetings exploring the possibilities of how and when can the UK launch its ambitious central bank digital currency (CBDC) project. At that time, both the parties seemed to be very serious about the launch of the UK’s very own CBDC.
Following that, a research and exploration committee was formed which researched the growth and other parameters so that the policymakers could take an informed decision. However, a few months later, a House of Lords Committee concluded that there is no conclusive evidence that can support the need for a CBDC.
According to a report published, UK’s Economic Affairs Committee hinted that while there are many advantages of CBDCs, it could at the same time challenge the basic financial system and protection of an individual’s privacy.
While many other countries have taken a progressive stance on their CBDC, the UK hasn’t warmed up to the idea of CBDCs. There have been varied takes on CBDCs and reportedly no common ground was found. The recent House of Lords Committee felt that although CBDCs are inevitable at present, it holds more challenges than solutions.
Therefore, for now, more groundwork needs to be done in order to formulate a plan wherein they can work out the logistics of how to avoid financial instability once people start to replace the bank deposits with digit wallets.
The committee also found that the technical specifications alone could well not be enough to counter the risk of surveillance. Lord Forsyth of Drumlean, Chair of the committee, believed that the same result can be achieved with less risky options.
The Bank of England in all likelihood has taken a neutral stand in this regard. Of course, it would want to protect individuals’ privacy, but it would also want to keep in mind to counter criminal activities. The Bank of England formed the CBDC Engagement and Technology forums, which had the likes of PayPal, Monzo, etc. deliberating on the chance of launching a CBDC.
Overall, the latest verdict indicates that the UK is still not ready to launch its own CBDC. The CBDC debate will continue in near future, following which we can see a series of testing before the actual launch of CBDCs in the UK.