Rising concerns about UK’s plan to launch a central bank digital currency (CBDC) have surfaced. A House of Lords all-party committee has raised concerns about the instability of a CBDC. It predicts that its launch would induce a nationwide run on banks resulting in economic turmoil.
The Committee admitted to some of the advantages of the CBDC, but it claims these are undermined by the negative consequences the launch will produce. It highlighted that it poses a “significant risk” to the UK.
Chair of the Committee Lord Forsyth of Drumlean released a statement in which he explains his concerns,
“We took evidence from… witnesses and none of them were able to give us a compelling reason for why the UK needed a CBDC…The concept seems to present a lot of risk for very little reward.”
Moreover, the parliamentary committee raised questions pertaining to the privacy issues that a CBDC would eventually cause. It also added that CBDC users will be under constant threat of attacks from scammers and hackers, while the blockchain tech supporting the digital currency will need proper attendance for it too will be under threat.
The UK’s ambition to run a CBDC program can be attributed to Rishi Sunak, Chancellor, who formed a task force combining the efforts of the Bank of England with the HM Treasury. The joint force was issue the task of exploring the possibilities and outcomes of a CBDC, or Britcoin as Rishi had unofficially dubbed the currency.