Soon a “britcoin” in the United Kingdom? The House of Lords is skeptical

The project of a digital pound sterling on which the Bank of England (BoE) is working leaves the British House of Lords skeptical, which on Thursday underlines the risks created by such an innovation without seeing any concrete advantage. The British upper chamber’s economic affairs committee says in a report that it “still not heard of a convincing argument that would explain why the UK needs“of a digital currency.

Like many monetary institutions around the world, including the European Central Bank (ECB), the BoE is exploring the possibility of issuing a digital currency, which would exist alongside cash and which individuals could use to make digitized payments without necessarily passing through. by banks.

The project “central bank digital currency “ (CBDC) had been nicknamed in the United Kingdom “britcoin” by the Minister of Finance.

Fight against cryptocurrencies

For central banks, this involves avoiding leaving this space to private actors (Facebook is participating in the creation of Diem, a cryptocurrency that would be modeled on the price of real currencies) or to a foreign power (the digital yuan is already in testing phase in China).

We recognize this is a risk, but introducing a CBDC may not be a necessary or complete response.“, argues the committee of the House of Lords.”Private entities that are big to compete with traditional payment systems can and should be regulated“, they suggest.

Too many risks according to the Chamber

The Chamber lists the risks it sees in this project: “state oversight of how people choose to spend their money, the possibility of massive bank withdrawals from the CBDC in the event of an economic shock, an increase in central bank power, and the creation of a weak spot centralized that could be targeted by attacks“digital.

If the government wants to continue“with this project,”Parliament should be given the opportunity to vote on the final decision“, concludes the report.

BoE and ECB projects, still in the study phase, could be completed in 2025. In addition to China, digital currency projects in various forms are being tested in Sweden and South Africa. They have already been launched in the Caribbean (Bahamas) or in Africa (Nigeria, Ghana).

=> Read also “Europe must be at the forefront”: what the digital euro will change for consumers.

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