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.
It is important to stress 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 sets outs the steps that the Government and Bank of England are taking to reinforce public trust in the design of a digital pound before any decision is made. 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 both the Government and Bank of England would not access users’ personal data. Moreover, as you may be aware, the Government has already legislated to safeguard access to cash, ensuring that it would remain available even if a digital pound was introduced.
Critically, access to cash is key to the Government’s work on financial inclusion and will ensure that the UK cash infrastructure remains sustainable. I can assure constituents, any proposals for a digital pound would not seek to replace cash or cause further financial exclusion for groups who rely on and prefer physical financial services infrastructure.
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. While levels of financial inclusion in the UK are high compared to many of our international counterparts, I would like to reassure constituents that tackling financial exclusion, particularly as financial services become more digital, is a priority for me and the Government.
I have ensured colleagues are aware of the human rights concerns people have raised as they engage in this conversation.
