Many countries have become interested in central bank digital currencies (CBDCs) in recent years. This is the case of the United Kingdom which is working on the issue of a digital pound sterling. The project has raised privacy concerns from many people. The Bank of England and the Treasury finally published the results of the consultation providing clear answers.
Legislation will be needed to protect privacy
The Bank of England and the Treasury published the results of the consultation on the digital pound sterling, a CBDC, on Thursday. The many people who saw this project as a risk of invasion of privacy were able to obtain answers. This was the main concern addressed in the consultation completed in June. The results show a cautious approach from stakeholders. Sarah Breeden, Deputy Governor of the Bank of England, highlighted the importance of trust in all forms of money. The decision to introduce this currency or not will determine the future of the currency, she adds.
Thus, the government has declared that it will issue primary legislation before the issuance of the digital pound. The legislation will ensure that the government cannot program a digital pound. For now, the decision whether or not to issue the digital pound sterling has not yet been made. This will probably happen between 2025 and 2026.
A holding limit set at 10 to 20,000 pounds sterling
Another notable point from the results of the consultation is the cap set. The Treasury Select Committee has proposed a book holding limit of less than €3,000. However, the Bank of England responded in its results that the cap will be £10,000 to £20,000, or approximately $12,727 to $25,460. It will also not come with an interest rate.
Digital Sterling will be accessible abroad, except in sanctioned countries. But for now, work on digital sterling is in its early stages. The Bank of England will continue public consultation before legislation is introduced.
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