The House of Lords Economic Affairs Committee, the investigative body representing the UK’s economic interests, has published an official report assessing the importance of the government’s central bank digital currency (CDBC).
A 52-page publication titled “Central Bank Digital Currencies: Solving the Problem?” It covers a number of areas related to the central bank’s inner workings of a central bank and regularly cites a preliminary study set created by the Bank of England and the UK Treasury in April 2020.
More than 50 people, including financial experts and professors from elite organizations and CEOs of large corporations as well as entire organizations, advise on the feasibility and nuances of digital resources in written and oral formats through panel discussions, hearings and online applications in the months prior 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 (XRP) and Standard Chartered provided oral reports.
The report’s overwhelming conclusion suggests that there is no compelling need for the UK to obtain early CBDC benefits, arguing that a number of issues and challenges remain significant, including geopolitical influence, a vast Meta user network, Chinese innovation, and cybersecurity among others. , “One point is prone to error.”
In addition, it was stated that poor planning and careless security measures could have “far-reaching consequences” and “significant risks” depending on the design of the asset’s infrastructure and intent to use it in the public sector.
A 13-member panel chaired by Lord Forsyth Drumlinsky concluded:
“While central bank digital currency may offer some benefits in terms of faster settlement and cheaper and faster cross-border payments, it will pose significant challenges to financial stability and privacy protection.”
Speaking of China, the committee noted that progress in competing with traditional economic infrastructure could “reduce the impact of US dollar sanctions and help countries seeking to avoid economic sanctions bypass US dollar-dominated regimes such as SWIFT.”
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Concerns were also raised that this could have broader implications for European markets, particularly with regard to the strengthening and introduction of the British pound and the euro.
The UK will benefit most in the long term by ensuring that global governance, privacy, security and compliance standards and regulations comply with the national interests and values of the UK and its allies.
The joint working group led by the Bank of England and the UK Treasury is expected to publish its findings later this year, having previously said that the digital pound could be minted in virtual circulation in the second half of this decade.
The House of Lords committee said “Parliament should be able to vote on any final decision” on the joint working group’s finding and released a public 10-point questionnaire to further investigate the issue.
