[NEWS] UK government and Bank of England comment on privacy protections regarding digital pound

The Bank of England and the UK Treasury have released a response to the consultation on the country's CBDC (central bank digital currency) "digital pound" that began in February last year.

At this stage, the final decision to issue a digital pound has not been made, but it is likely to be decided between 2025 and 2026. Before the digital pound can be issued, Parliament, the UK's legislative body, must pass a bill.

If a digital pound is issued, it will be possible to hold digital pounds with the same value as physical cash. As a broad initiative on payment innovation, the digital pound will also help solidify the UK's position as a competitive global leader in the financial sector.

Going forward, they will consider how the digital pound can be used in the UK economy to provide greater choice, convenience and innovation to individuals and businesses.

Feedback from respondents to the digital pound consultation, which began in February last year and ended in June, asserted concerns about access to cash, user privacy and email management if a digital pound were introduced.

As a countermeasure, they will ensure user privacy and control. Specifically, banks and governments will not have access to personal data, and users will be free to choose how to spend the digital pound.

The design will prevent the government from intervening to prevent users from making certain transactions. In addition, public consultations will be held on legislation introduced to protect privacy.

The limit on the digital pound will also be discussed

In its response, the cross-party Treasury Select Committee scrutinizing the Treasury's efforts suggested that the limit on the digital pound should be low, similar to the €3,000 limit, but the Bank of England suggested that the limit would be set at 10,000 to 20,000 pounds, but that this could be reviewed in the future.

Cash use is declining in the UK, and the Bank of England said the state-backed digital option could be an alternative to existing bank payments and separate payment systems that could be developed by major technology companies.

Bim Afolami, economic secretary to the Treasury, said, "We want to ensure that the UK is prepared if a decision is made to issue a digital pound in the future. We will ensure that people's privacy is paramount in any design, and that it will be done in parallel with traditional cash, not in place of it."

Reference:Announcement
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