Britain’s central bank is reportedly considering axing its central bank digital currency (CBDC) plans over concerns that it may not be beneficial to the bank or financial system.
The Bank of England (BOE) is reconsidering its plans for a consumer-focused digital pound amid growing skepticism about its necessity and benefits, Bloomberg reported on Tuesday, citing people familiar with the matter.
BOE officials are privately encouraging banks to accelerate payment innovations instead of creating a consumer CBDC. The central bank’s Governor Andrew Bailey stated he would need “a lot of convincing” if commercial bank innovations succeed.
“I think that’s a sensible place to do it,” he told the Treasury Committee at a Parliamentary hearing on Tuesday. “If that’s a success, I question why we need to introduce a new form of money.”
The move is the latest sign of dwindling support for state-backed digital currencies globally and is a retreat from the BOE’s previous position that a digital pound was “likely needed.”
“On the basis of our work to date, the Bank of England and HM Treasury judge that it is likely a digital pound will be needed in the future,” Bailey said in 2023.
UK slow to adopt CBDCs
US policy think tank Atlantic Council shows the UK’s CBDC is in development and is comparatively behind other jurisdictions with its digital currency, as Bloomberg reported that no final decision has been made yet on whether to proceed.
The project has reportedly attracted the attention of conspiracy theory groups, faced attacks from lawmakers, and prompted over 50,000 responses, mostly critical, during a request for public comments.
Privacy concerns from consumers have been raised in addition to fears of destabilizing bank runs during crises. There were also concerns about foreign or Big Tech stablecoins potentially undermining the British pound.
US anti-CBDC bill passes
CBDCs have been halted across the pond in the US with the House passing the Anti-CBDC Surveillance State Act in addition to two crypto bills last week.
The bill is designed to block the Federal Reserve from issuing or testing a CBDC without explicit congressional approval.
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Earlier this week, Republican congresswoman Marjorie Taylor Greene said that the GENIUS Act stablecoin-regulation bill creates a “backdoor” for the government to create a CBDC, veiled as privately issued crypto tokens.
CBDC ecosystem expanding
Only three countries have officially launched a CBDC: the Bahamas, Jamaica, and Nigeria.
There are 49 countries in the pilot phase, 20 in the development phase, and 36 in the research phase, according to the Atlantic Council’s CBDC tracker.
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