International Finance: U.K. Lords See No Convincing Case for BOE to Make Digital Pounds

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A panel of lawmakers from the U.K. Parliament delivered a blow to the Bank of England’s effort to launch a digital currency, saying officials have given no convincing reason it’s needed.

The House of Lords Economic Affairs Committee, which includes former BOE Governor Mervyn King, raised concerns the project might threaten the stability of the banking system and inject the central bank into controversial debates on privacy.

BOE officials led by Deputy Governor Jon Cunliffe have become increasingly vocal about the need for CBDC. They note a sharp drop in the use of cash is leaving money increasingly controlled by private companies that don’t have the explicit government guarantee carried by banknotes and coins. Alarmed by the growth of crypto currencies including Bitcoin, the BOE along with other central banks is weighing whether to introduce its own form of digital money. The aim is to smooth the way online payments work and deliver the security that cash brings in a digital form — updating paper banknotes for the 21st century.

 

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