Select committee: Treasury Committee
Recommendation 10
First Report - The digital pound: still a solution in search of a problem?
Published 2 Dec 2023
Paragraph 58
Addressed to HM Treasury
Treasury Committee The crypto-asset industry All items in this report Report on parliament.uk ↗ Inquiry on parliament.uk ↗
Recommendation (the committee's words)
This report has set out some of the benefits and risks from a digital pound. While there are some potential benefits, their extent is unclear and there are significant risks and challenges to be worked through, particularly in relation to privacy and financial stability. It is not clear to us at this stage whether the benefits are likely to outweigh these risks. Nevertheless, we support the Bank of England and Treasury undertaking further consultative work on the design of a digital pound to enable it to be launched if benefits increase and risks to privacy and financial stability are mitigated. This consultative work could also have wider, indirect benefits for the UK’s competitiveness by furthering the Treasury and Bank of England’s understanding of new payment technologies. It is important, however, that work on the digital pound does not distract the Bank of England from its core tasks of controlling inflation and maintaining financial stability.
From: Treasury Committee, First Report - The digital pound: still a solution in search of a problem? (HC 215), paragraph 58, 2 December 2023
Government response
The government responded to the whole report on 31 January 2024 (deadline 1 February 2024).
Summary written by Accountability Index from the government's response. It is not the government's own words.HM Treasury and the Bank of England say that no decision has been taken on whether to introduce a digital pound, and that the design phase will inform a decision "later this decade".
- On privacy, they "agree that strong privacy safeguards would be vital" and say the Government "has committed to guaranteeing users' privacy in primary legislation if a digital pound were launched".
- On interest, they do not commit to further analysis or to keeping the option open: a digital pound "would be unremunerated at launch", and any later change would be "preceded by a review with full consultation".
- On costs, the Bank "acknowledges" the request for a separate line item and says it "will consider the appropriate reporting mechanism going forward".
- On holding limits, they are "minded to proceed at this stage" with a £10,000 to £20,000 limit, "at least during the introductory period", while remaining "open to revisiting the bounds of this range if new information came to light".