The UK authorities have announced a delay in making a decision about the introduction of a state-backed digital pound. The Bank of England and Britain’s finance ministry will continue preparatory work following a public consultation that received 50,000 responses, many of which raised concerns about privacy. The final decision on the project, also known as a central bank digital currency, is now expected to be made around the middle of the decade.
Planning and Design Phase Continues, Build Phase Decision Expected in Mid-Decade
Prime Minister Rishi Sunak initially supported the idea and urged the Bank of England to start working on the project in 2021 when he was the finance minister. However, even if the project receives approval, it is unlikely to be operational until the end of the decade. Under the proposals, Britons would be able to hold electronic pounds with the value equivalent to physical cash, up to a limit of £10,000 to £20,000. The digital pound would not pay interest, and banks had expressed concerns about potential outflows from standard bank accounts.
“The UK authorities delay decision on a digital pound, as privacy concerns continue to persist. ”
Privacy Concerns Surround State-Backed Digital Currency
Digital currencies are raising privacy concerns worldwide, and the UK is not alone in grappling with this issue. The European Central Bank and the US Federal Reserve are also examining privacy implications. The European Union’s digital euro legislation has been hindered by similar concerns. However, the UK government insists that a digital pound would not be anonymous but would still provide privacy. Transactions suspected of money laundering or financing terrorism could be tracked by authorities, but a digital pound would not replace cash, ensuring the public still has the option of anonymous payments.
