In a recent article, two British lords have raised speculations over the need for central bank digital currencies (CBDCs). Notably, the lawmakers also warned against the idea of introducing a CBDC “by stealth.”
Lord George Bridges and Lord Michael Forsyth of Drumlean took a jab at the Bank of England (BoE) and questioned why the BoE requires CBDCs. The lords expressed their concern that the BOE is exploring technologies for implementing a digital Pound “while Parliament has been dozing and mute.”
The lawmakers also put forth concerns that have flared at various locations regarding the adoption of CBDCs. Both Bridges and Forsyth expressed a few areas of concern, including privacy and criminal activity. They opined that a CBDC could not be used anonymously without increasing criminal activity. Hence, essential payment data on who is using digital pounds would be needed. They added:
Who holds that (CBDC), and who has access to it, opens up a can of worms, creating concerns that a digital pound could be used for state surveillance, dragging the Bank into issues that could undermine its independence.
Further, the lords pushed for legislation instead of allowing the BOE to maintain full control of the CBDC project. They intend on having legislation that would guarantee that a “Britcoin could not be introduced without primary legislation and proper parliamentary scrutiny.”
However, the BOE’s interest in CBDCs is nothing new. The central bank started publicly exploring a possible CBDC last year and also published a consultation paper on the topic in February. As well as looking into what’s needed to build and launch a CBDC, the BOE gave a very rough possible timetable for decision-making.
Earlier this month, the BOE also penned a paper on CBDC implementation alongside the Federal Reserve and five other international financial institutions. In its paper, the British central bank wrote that some members might be deciding on whether to proceed with their CBDC to the next level.
Some of the members of this group are approaching a point where they may decide on whether or not to move to the next stage of their CBDC work.
The next level was counted as a deeper investment in design decisions relating to technology, end-user preferences, and business models while leaving open the decision on whether to issue CBDC. However, England isn’t the only country facing scrutiny for its work, the US is also engaged in conversations about CBDC implementation.
Notably, the lawmakers in the US have been largely divided on the topic with Republicans being anti-CBDC. Several Republican lawmakers including Tom Emmer have opined CBDC to be a weapon of authority and control and to seize people’s right to privacy and freedoms.
Florida has already enacted an anti-CBDC law, signed by Governor Ron DeSantis, which will take effect on July 1. Simultaneously, on Capitol Hill, lawmakers have also introduced a bill this month called the Digital Dollar Pilot Prevention Act to prevent a CBDC.