The U.K. government said it is proceeding cautiously with the design phase of its central bank digital currency (CBDC), according to a Jan. 25 response issued to the Treasury Committee.
The Government emphasized that no final decision has been reached regarding the digital pound’s launch, adding that its officials are still exploring the feasibility and designs of a CBDC.
The regulatory body further stated that it is defining the criteria and developing a comprehensive assessment framework to determine the viability of launching the national digital asset.
“The design phase will deepen our understanding of how to design a digital pound that maximises opportunities whilst mitigating risks and aims to develop a robust evidence base to inform a decision later this decade as to whether, or not, to proceed to launch,” the HM Treasury and the Bank of England wrote.
Treasury Committee chair Harriet Baldwin described the digital pound as a “major technology project” that should be undertaken only if the benefits outweigh the risks.
Privacy concerns
The Bank of England and the Treasury also addressed privacy concerns attached to the currency.
According to the joint statement, the Government will ensure user privacy through concrete legal measures. Furthermore, law enforcement agencies’ access to users’ personal information would be strictly limited and contingent on a fair and lawful basis.
“HM Treasury and the Bank agree that strong privacy safeguards would be vital if a digital pound were to be introduced,” they wrote.
The response also explicitly outlined that neither the Bank of England nor the U.K. Treasury would have access to users’ data in the event of a retail CBDC rollout.
“One of the key risks is around the potential misuse of data, which is why we recommended privacy protections be enshrined in primary legislation should a digital pound be introduced,” said the committee’s chair.
Protecting access to cash
Moreover, both governmental bodies stressed their commitment to safeguarding “access to cash” if a CBDC is issued.
They said:
“A digital pound would complement, not replace, cash. The Government and the Bank have a clear commitment to maintain access to cash for those who want to use it.”
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