A Committee of peers in the House of Lords has concluded that there is no convincing case for the creation of a central bank digital currency in the UK.
The upper chamber of the House of Commons commenced its inquiry into the issue in November, taking evidence from the Bank of England and senior banking officials.
Lord Forsyth of Drumlean, Committe Chair, comments: “We took evidence from a variety of witnesses and none of them were able to give us a compelling reason for why the UK needed a central bank digital currency. The concept seems to present a lot of risk for very little reward. We concluded that the idea was a solution in search of a problem.”
In publishing its report, the Committee expresses a view that the creation of a retail CBDC could lead to a run on bank deposits in times of economic stress and could also draw the Bank of England into controversial debates on privacy and state surveillance.
Security risks, both from the pilfering of individual accounts and hostile attacks on the centralised CBDC ledger, were also highlighted.
States Forsyth: “The introduction of a UK central bank digital currency would have far-reaching consequences for households, businesses, and the monetary system. We found the potential benefits of a digital pound, as set out by the Bank of England, to be overstated or achievable through less risky alternatives.”