A central bank digital currency (CBDC) could raise borrowing costs while undermining financial stability, according to UK lawmakers. They insist the potential advantages of the touted digital pound have been overstated.
invasion of privacy
British lawmakers say the use of a central bank digital currency for regular payments could harm financial stability and raise borrowing costs, according to a report. Furthermore, they maintain that the growing use of CBDCs could also erode privacy by enabling central banks to monitor spending.
According to Reuters Report, lawmakers argue that the benefits of a CBDC may be overstated, and that the UK has other ways to deal with the threat posed by cryptocurrencies. One of the speaking lawmakers cited in the report was Michael Forsyth. He said:
We are very concerned about some of the risks that come with the introduction of a CBDC.
Forsyth, who chairs the Economic Affairs Committee, also said the touted benefits of having a CBDC are “exaggerated.” He suggested that these benefits could still be realized through less risky alternatives, such as regulation of crypto-issuing tech companies.
Lawmakers want parliament to have a say
In a report to the U.K. Parliament by the Forsyth Commission, lawmakers acknowledged that a wholesale CBDC that could be used to move large sums of money could increase the efficiency of securities trading and settlement. However, lawmakers still want the central bank and Treasury to weigh the benefits of using a CBDC versus expanding the existing system.
Forsyth was quoted in the report as saying that before allowing the Bank of England and the UK Treasury to continue issuing CBDCs, lawmakers must have a say.
“[A CBDC could have] profound impact on households, businesses and the monetary system. This needs to be approved by Parliament,” Forsyth was quoted as saying.
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