The House of Lords Economic Affairs Committee, an investigative governing body representing UK economic interests, has released an official statement. report assess the relevance of a government-issued central bank digital currency (CDBC).
Entitled โCentral Bank Digital Currencies: A Solution in Search of a Problem?โ, the 52-page publication covers a litany of areas in relation to national CBDC efforts, regularly citing the preliminary research task force set up by the Bank of England and Her Majesty's Treasury in April 2020.
More than 50 people, including financial experts, university professors from elite institutions, CEOs of large corporations, as well as entire organizations consulted on the feasibility and nuances of a digital asset in written and oral formats on round tables, hearings, and online presentations in the months leading up to publication.
Andreessen Horowitz, the Blockchain Association, and Crypto UK provided written assessments, while Charlotte Hogg, CEO of Visa Europe, Andrew Bailey, Governor of the Bank of England, Ripple, and Standard Chartered provided verbal accounts.
The overwhelming conclusion of the report determined that there is no immediate need for the UK to fight for first mover advantage in the CBDC space, arguing that a number of questions and challenges remain important, including geopolitical influences. , the vast network of users from Meta, China. innovation and cybersecurity in what could become a "vulnerable single point of failure", among others.
Furthermore, it was stated that inadequate planning and careless security precautions could have "far-reaching consequences" and "present significant risks" depending on the asset's infrastructure design and intended use in the public domain.
The 13-member committee, chaired by Lord Forsyth of Drumlean, concluded:
โWhile a CBDC may provide some advantages in terms of speed of settlement and cheaper and faster cross-border payments, it would present significant challenges to financial stability and privacy protection.โ
Speaking about China, the committee noted that progressions to compete with traditional economic infrastructure could "erode the leverage of US dollar sanctions, helping countries seeking to evade economic sanctions to circumvent US dollar-dominated systems, such as SWIFT".
Related: Treasury and UK central bank to consult on CBDC, which could launch by 2030
It also raised concerns that this could have broader consequences on European markets, specifically in terms of the strength and adoption of the British pound sterling and the euro.
The UK would have the greatest long-term benefit in ensuring that global standards and rules on governance, privacy, security and interoperability are compatible with the national interests and values โโof the UK and its allies.
The Joint Task Force overseen by the Bank of England and Her Majesty's Treasury is expected to publish its findings later this year, having previously stated that a digital pound could be minted into virtual circulation in the second half of this decade.
The House of Lords committee has stated that "Parliament should be given the opportunity to vote on any final decision" following the results of the Joint Task Force, and has issued a 10-point public questionnaire to further investigate the matter.
Post navigation
