The United Kingdom has assured that the impending legislation for a digital pound will prioritize user privacy and the control of their funds, according to a new report by the country’s Ministry of Finance and the Bank of England (BoE).
The report, which was published after a comprehensive consultation on the possibility of launching a central bank digital currency (CBDC) in the country, emphasized that introducing a digital pound would help promote choice and innovation.
The report also highlighted the role of new technologies in reshaping both ‘retail’ transactions carried out by businesses and households and ‘wholesale’ transactions involving banks and other financial entities. According to both institutions, a digital pound would empower private firms to develop inventive payment methods and offer people more options for making transactions.
The BoE also emphasized its commitment to ensuring the safety of these transactions, aiming for widespread accessibility and benefit for all parties involved. To achieve this, the bank is actively enhancing its core technology, which forms the backbone of all transactions within the United Kingdom.
The HM Treasury and the Bank of England released a consultation paper in February 2023 seeking public input on the proposed retail CBDC, “digital pound” and conducted a survey in June 2023 for the same reasons. The survey garnered over 50,000 responses. Notably, some of the responses included concerns regarding the design and user experience of the digital pound sterling.
This new legislation move puts the UK among the few countries globally aiming to introduce CBDCs to their citizens. The CBDC is envisioned as a novel form of the pound sterling, akin to a digital banknote already issued by the Bank of England. The bank clarified that the CBDC will find applications in in-store purchases, online transactions, and individual-to-individual transfers. Importantly, it will not replace the traditional sterling but rather serve as a complementary variation.
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