Bank of England’s digital pound consultation draws an overwhelming public response

In an unprecedented level of public involvement, the Bank of England (BOE) received over 50,000 responses concerning its consultation on the potential introduction of a digital pound. Deputy Governor Jon Cunliffe disclosed this figure in a recent speech and highlighted the primary concerns voiced by the public: privacy, programmability, and the decline of physical cash.

Major concerns raised by respondents

At the heart of the feedback is the apprehension regarding user privacy in the digital era. The majority of respondents shared their reservations about how the central bank would handle personal data and the level of privacy attached to transactions made with a digital pound. Addressing these worries, Cunliffe assured that users of the digital pound would enjoy the same level of privacy as they currently experience with electronic payments. Moreover, he affirmed that the Bank of England would not have access to individual transaction data, dispelling fears of state surveillance.

Another focal point of the feedback was the topic of programmability. The public expressed concerns that the BOE might limit the digital pound’s functionality or make it programmable, dictating its terms of use. Clarifying this point, Cunliffe mentioned that the central bank had no intentions of restricting the digital pound’s functionality. Instead, he stated, “It would be for private sector firms to develop and offer, for user consent, payment services involving greater programmability.”

The transition from physical cash to digital currency is a topic that has been met with varying degrees of acceptance worldwide. Echoing these global sentiments, respondents indicated concerns about the possible decline or extinction of cash if a digital pound becomes mainstream. Addressing these concerns, Cunliffe referenced recent government legislation that ensures the continued availability of physical cash, emphasizing its importance alongside digital innovations.

Debates surrounding the digital pound’s implementation

Cunliffe acknowledged the wide range of opinions and debates surrounding the digital pound’s potential introduction. While some critics argue that a swift and large-scale adoption could undermine the existing banking system and destabilize the financial sector, others opine that a digital pound might not find its place in the market, labeling it as a “solution looking for a problem.” Additionally, some banking experts voiced concerns in February that introducing a digital pound might create a distinct divide between physical cash and digital money, complicating the monetary ecosystem further.

Moving forward: Stablecoins and regulations

While the digital pound remains under consultation, the Bank of England is also turning its attention to the burgeoning world of stablecoins – cryptocurrencies whose value is anchored to traditional assets such as the pound sterling. Cunliffe promised a forthcoming discussion paper focusing on the bank’s approach to major stablecoins.

Shedding light on the regulatory framework, Cunliffe hinted at potential constraints on decentralized models. He emphasized the bank’s requirement for a discernible legal entity responsible for the risk management of the entire payment system. He expressed skepticism about whether public, permissionless transfer systems, given current technological capabilities, would comply with this stipulation.

The BOE is also considering setting limits on stablecoins similar to those proposed for the digital pound. Cunliffe further stated that banks wishing to issue stablecoins should establish a distinct legal entity with a separate brand identity. This initiative aims to prevent consumer confusion and mitigate potential risks in differentiating between traditional and digital money forms.

Conclusion

While the journey to introduce a digital pound is paved with challenges and concerns, the Bank of England’s commitment to addressing public concerns and ensuring a balanced monetary ecosystem is evident. The overwhelming response to the consultation underscores the significance of such a move in today’s digital age and the collective stake society has in its outcome.

Source: https://www.cryptopolitan.com/bank-of-englands-digital-pound-consultation/

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