The potential digital launch has raised concerns for the U.K. Parliamentary Committee, which expresses reservations about the substantial investment it might necessitate. They emphasize their uncertainty about whether the benefits will likely outweigh these risks at this stage.
The Bank of England and the Treasury, as called for by the U.K. Parliamentary Committee, should conduct further consultative work on the potential benefits of a digital pound.
The report from the House of Commons Treasury Committee noted that the Bank of England and the Treasury have incurred significant costs in researching and testing a CBDC.
The Bank of England and Treasury, as recommended by the House of Commons Treasury Committee, should provide greater transparency on the costs associated with CBDC initiatives by including a separate line item in their annual report and accounts from 2024.
“It is important for the Bank of England and Treasury to control these costs to avoid spending more than necessary on a digital pound that might not be built .”
The ongoing research and testing of CBDCs in the U.K. have identified several potential benefits, including efficient issuance and distribution of currency, improved privacy and security, and reduced costs for payments.
While acknowledging the potential benefits of a CBDC, the committee expresses concerns about the significant investment required for a successful launch, adding that it is not clear whether the benefits are likely to outweigh these risks at this stage.
The committee urges the Bank of England to avoid overstating the potential benefits of a CBDC and to be mindful of the risk of further exacerbating financial exclusion in a digital economy.
Although the Bank of England and HM Treasury recognize the potential need for a digital pound in the future, they have acknowledged that significant work is required before implementing such a system for brevity.
Some of the key factors influencing the decision to launch a digital pound, including the declining use of cash, the emergence of private digital currencies, and the progress of CBDCs in other countries, will be taken into account during the design phase of the project.