A Central Bank Digital Currency in United Kingdom
The House of Lords of the United Kingdom parliament within its role of making and shaping laws and checking and challenging the work of the government, released a report on Central Bank Digital Currencies (CBDC) with a final overall conclusion regarding its issuance in UK: While a retail CBDC (for the general public, not just for companies as would be the case with a wholesale CBDC) may provide some advantages, it could present significant challenges for financial stability and the protection of privacy. Many questions, that currently have not a clear answer, should be answered before the introduction of a UK CBDC and, in any case, the parliament should vote any final decision on this regard.
- To what problem is a CBDC the answer?
- What is the precise threat posed by privately issued digital currencies, what it is that a CBDC could do to offset any threat, and what is the role of regulation?
- How can a CBDC be a competitive payments option without causing a level of banking sector disintermediation that would have negative consequences for credit allocation and financial stability?
- How can a CBDC ensure strong privacy safeguards while also meeting financial compliance rules? Which organizations will be able to access sensitive CBDC payments data, and for what purpose will that data be used?
- What are the main international and national security risks that arise from a CBDC, and how can these be managed? How can a CBDC be made secure against current and future threats without sacrificing useability?