UK Economic Affairs Committee not convinced of the prospect of CBDC for retail

The House of Lords’ Economic Committee, a body of inquiry that represents the UK’s economic interests, has published an official report that eEvaluates the relevance of a government-issued central bank digital currency (CDBC).

The 52-page publication, entitled “Central Bank Digital Currencies: A Solution in Search of a Problem?” addresses a number of areas related to the CBDC’s national efforts and regularly cites the April 2020 Bank of England and Her Majesty’s Treasury Preliminary Inquiry Task Force.

More than 50 people, including financial experts, university professors from elite institutions, managing directors of large corporations and entire organizations, advised in panel discussions, hearings and online presentations in written and oral form on the feasibility and nuances of a digital asset the months before the market launch.

UK Economic Affairs Committee not convinced of the prospect of CBDC for retail
UK Economic Affairs Committee not convinced of the prospect of CBDC for retail

Written reviews were submitted by Andreessen Horowitz, the Blockchain Association and Crypto UK, while Charlotte Hogg, CEO of Visa Europe, Andrew Bailey, Governor of the Bank of England, Ripple and Standard Chartered provided oral reports.

The report’s overwhelming conclusion was that the UK does not have to contend directly for leadership in the CBDC area., argues that a number of issues and challenges still matter, including geopolitical influences, Meta’s vast user network, China’s innovation and cybersecurity, which could become a “single vulnerable point of failure” ???? .

Likewise, Improper planning and negligent safety precautions could have “far-reaching consequences” and “considerable risks” depending on the infrastructure design and intended use in public space, it said.

The 13-member committee, chaired by Lord Forsyth of Drumlean, concluded:

While a CBDC can offer some benefits in terms of speed of processing and cheaper and faster cross-border payments, it would pose significant challenges for financial stability and privacy.

With regard to China, the committee found that advances in competition with traditional economic infrastructure “could undermine the influence of US dollar sanctions and help countries circumvent economic sanctions by bypassing dollar-dominated systems. Americans like SWIFT. “

Likewise expressed concern that this could have wider implications for European markets, particularly in terms of the strength and acceptance of the British pound and the euro.

The UK would derive the greatest long-term benefit from ensuring that global standards and rules on governance, data protection, security and interoperability are consistent with the national interests and values ​​of the UK and its allies.

The Joint Task Force, overseen by the Bank of England and Her Majesty’s Treasury Department, is expected to release its findings later this year, having previously stated that a digital pound could be minted in virtual circulation in the second half of this decade.

The House of Lords Committee has stated that “Parliament should have the opportunity to vote on any final decision,” according to the findings of the Joint Task Force, and has issued a 10-point public questionnaire to mean That is the bottom line .

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