Source · Select Committees · Treasury Committee
Recommendation 2
2
Rejected
Paragraph: 34
Digital pound risks UK financial stability; lower initial individual holding limits needed.
Conclusion
It is vital that a digital pound does not increase risks to UK financial stability and, were a digital pound to be launched, it could take some time to fully understand the impact on financial stability and the wider economy in both normal and stressed times. To reduce the risk of large-scale outflows from bank deposits into digital pounds, there could be merit in a more cautious approach of a lower initial limit on individual holdings than the £10,000-£20,000 limit proposed by the Bank of England and Treasury, with a view to increasing it over time.
Government Response Summary
The government rejects the suggestion for a lower initial holding limit, stating it is minded to proceed with a £10,000-£20,000 limit for the digital pound, while remaining open to revisiting this if new information arises.
Paragraph Reference:
34
Government Response
Rejected
HM Government
Rejected
On limits, the Committee concluded there may be merit in a more cautious approach of a lower initial limit on individual holdings than the proposed £10,000-£20,000 limit to reduce the risk of large-scale outflows from bank deposits. Having reviewed the consultation feedback, views on the appropriate level of limits on individuals’ digital pound holdings ranged widely. HM Treasury and the Bank are minded to proceed at this stage with a proposed holding limit in the range of £10,000 to £20,000, at least during the introductory period. HM Treasury and the Bank remain open to revisiting the bounds of this range if new information came to light, and will continue to analyse the impact of limits and engage with industry on this issue. It is worth noting that the risks of fast and disorderly outflows of deposits from the banking sector already exist in today’s digital payments landscape and will continue to exist irrespective of the digital pound. We will use regulation to continue to manage these risks.