The UK Parliamentary Committee, House of Commons, has requested the Bank of England and Treasury to conduct additional consultative work to assess the benefits and feasibility of launching a digital pound. This initiative is part of the ongoing efforts to explore the potential of a central bank digital currency (CBDC) in the UK. The Committee emphasizes the need for transparency regarding the costs incurred in CBDC development and has recommended a separate line item for these expenses in annual reports from 2024 onwards.
The tests conducted so far have revealed several benefits related to issuance, distribution, and privacy. However, there are concerns about the substantial investment required for an official launch, with uncertainties whether the benefits will outweigh the risks. The Committee advises the Bank of England to avoid overestimating the capabilities of a digital pound, particularly in fixing problems beyond its scope and ensuring it does not exacerbate financial exclusion. The Bank of England and HM Treasury acknowledge the future need for a digital pound but recognize that significant preparatory work is still required. The decision to proceed with the launch will be influenced by various factors, including the declining use of paper money, the rise of privately issued digital currencies, and international CBDC developments.
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