The UK Treasury Secretary announced the launch of a CBDC working group this week, which brought together the Bank of England and Her Majesty’s Treasury to coordinate the study of a potential central bank digital currency.
Based on feedback from a variety of industries, academia and civil society, staff will advise the Bank of England of a future proposal (or rejection) for what will be a digital version of the pound.
Anthony Welfer, CEO of NEM’s Enterprises, is a member of the Whitechapel Financial Payments think tank and working group that provided the Bank of England with preliminary studies to form the CBDC task force. The charity contributed to a report titled The Impact of Digital Currency on the Future of Payments, commissioned by the Bank of England and published in December 2020.
The working group will consider the implementation of CBDC from all possible angles, but for Cointelegraph, Welfare said that one of the biggest benefits the digital pound has to offer could be financial inclusion, in view of the proliferation of mobile devices and their ubiquity. among the population:
“A central bank’s digital currency can be enormously helpful in promoting economic integration. The vast majority of citizens today have access to mobile devices, and the potential benefits of accessing public digital currency in the palm of their hand are incredible. ”
Social Security pointed to the benefits that the digital system could provide in the midst of the COVID-19 lockdown, especially in helping the government pay unemployment benefits to laid-off citizens.
“In the event of a crisis, for example, if the government wants to send incentive payments, the currency can be immediately issued to millions of citizens – as was recently tested in China using the digital yuan,” Ar-Rafah added.
The 74-page report, published by the Whitechapel Foundation Working Group on Thinkers and Financial Payments, highlights six key policy issues related to CBD implementation in the UK, and these include widely discussed issues such as regulation, international cooperation, innovation and the need for global safety standards. and privacy that will be imposed with the advent of new technologies.
But, as noted by the Welfare agency, the likelihood of misunderstandings will remain among government officials, banks and beyond. He believes that the educational process should be part of the roadmap of any potential CBD proposal.
“As the CBDC roadmap accelerates, many stakeholders will misunderstand the fundamentals of the central bank, even today many governments and banks do not understand the benefits of CBDC cryptocurrencies – educating these stakeholders should be part of the CBDC roadmap for every state,” Welf said.
Transparency in the use of blockchain technology is generally seen as a desirable benefit, but Welfare believes it may be one of the obstacles preventing privacy-conscious devices from joining the CBDC.
“The biggest problem might be privacy issues.” Al-Rafah said the blockchain is inherently secure and provides excellent data protection, which she says can be built and controlled in a way that doesn’t provide the privacy that citizens or businesses want.
China’s swift move to launch the central bank’s digital currency – the digital yuan – could also be a deciding factor in whether the UK launches the digital pound, says Luxury, who warned that a “ripping CBD digital currency” could undermine the pound as it stands. exist .
“In the long term, one of the main drivers of digital pound sterling may be international trade,” Al Rafah said, adding: “Countries that have digital currencies for central banks may require payment in their own digital currency. , digital yuan, digital dollars, etc., which would be a politically sensitive negotiating issue and could undermine the value of the British pound.