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UK's bold step: Say goodbye to cash! The digital pound unveiled – A revolution or privacy nightmare?

The digital pound unveiled – A revolution or privacy nightmare

The United Kingdom is poised to intensify efforts in conceptualizing a digital version of its currency, the pound, as authorities recognize the necessity to keep up with evolving technologies that shape the way people engage with money in the foreseeable future.

In a joint statement, the Treasury and the Bank of England have underscored the need for further investigation into the development of a central bank digital currency (CBDC). This move comes amid a shifting landscape where consumers are progressively abandoning cash transactions in favor of mobile and card payments, prompting officials to safeguard government influence over currency usage as reported by Bloomberg.

Addressing concerns over privacy and security, both institutions responded to public apprehensions, especially from conspiracy theory groups, reflecting a commitment to maintaining a balance between innovation and individual rights.

Economic Secretary to the Treasury, Bim Afolami, emphasized the significance of prioritizing privacy in any digital currency design. He stated, "We are at an exciting time of innovation in money and payments, and we want to ensure that the UK is prepared should it decide to create a digital pound in the future."

The announcement follows a consultation on the design of a digital pound held last year, which received an unprecedented 50,000 responses. The Bank of England articulated that the upcoming design phase would explore feasibility and potential design options.

Subsequently, discussions between the government and the Bank of England will determine the decision to create a digital pound, followed by a future consultation on legislation and a potential launch.

The Treasury Committee, a parliamentary cross-party group, expressed skepticism regarding the benefits versus risks of a CBDC. Concerns were raised about the potential for a digital pound to be used as a safe haven during crises, potentially triggering a bank run. Privacy issues have also been emphasized by conspiracy theory groups, although the government and the Bank of England asserted that they would not have access to users' personal data.

Acknowledging these concerns, the government emphasized the need for legislation to protect users' privacy and control over their finances in the event of implementing a digital pound. The statement clarified that any legislation introduced would undergo thorough deliberations in Parliament before enactment.

Currently, cash remains the sole state-issued form of money accessible to consumers in the UK. The Bank of England aims to ensure that citizens have access to a form of "public money" explicitly backed by the government, as opposed to money deposited in banks, which represents a commitment by a private entity.

Sarah Breeden, Deputy Governor of the Bank of England, stressed the importance of building public trust and garnering support from businesses and individuals who will utilize a digital pound when introduced.

Recognizing the pivotal role this decision will play in shaping the future of money, she stated, "It is essential that we build that trust and get the support of the public and businesses who will use it when it is introduced."


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