For many, a ‘digital pound’ is an exciting prospect. However, a number of constituents have contacted me to raise their concerns regarding the UK’s CBDC proposals, particularly with regards to human rights and privacy.
The Bank of England and HM Treasury have been exploring the concept of a UK retail CBDC or ‘digital pound’. A digital pound would be a new form of digital money for use by households and businesses for their everyday payment needs, and a complement to physical cash and other means of payment. I understand that no decision has yet been made to build or issue a digital pound, either for corporates or for the public. However, given changes in money and payments, as well as developments in other countries, I believe there is merit in further preparatory work.
The Bank of England and HM Treasury Consultation Paper sought feedback from the public on a set of design proposals for the digital pound. Respondents from a range of industries and organisations were supportive of the design proposition set out in the Consultation Paper, while many other respondents raised concerns about the implications of a digital pound for access to cash, users’ privacy, and control of their money.
The Consultation Response, published in January 2024, sets out the steps the Government and the Bank of England would take to reinforce public trust in the design of a digital pound before any decision is made to build or issue one.
A digital pound would only be introduced once Parliament has passed the relevant legislation, prior to which a further consultation exercise would be held. Privacy, and preventing government programmability, would be a core design feature of the digital pound issued by the Bank of England, and neither the Government nor the Bank of England would access users’ personal data. Moreover, as you may be aware, the former Conservative Government legislated to safeguard access to cash, ensuring that it would remain available even if a digital pound was introduced and that the UK cash infrastructure remains sustainable.
I would like to reassure you that tackling financial exclusion, particularly as financial services become more digital, is a priority for me. Financial inclusion means that everyone, regardless of their background or income, has access to useful and affordable financial products and services such as banking, payment services, credit, insurance, and the use of financial technology. Levels of financial inclusion in the UK are high compared to many of our international counterparts.
I would like to reassure you that the Opposition will continue to engage with the Bank of England and HM Treasury as they develop proposals for a digital pound and I have ensured Ministers are aware of the human rights concerns you raise.
