UK citizens fear the surveillance and financial stability risks associated with a government-issued digital currency.
A recent survey by the Bank of England and His Majesty’s Treasury dampened ambitions to introduce a central bank digital currency.
CBDC Monitoring Question Still Taking Over: UK Survey
A survey of 50,000 British citizens revealed concerns about the surveillance and that its digital nature would allow customers to quickly move money around and cause financial instability. Others expressed concerns about the future of cash.
Despite central bank attempts to allay privacy concerns, the CBDC system for tracking user balances offers unparalleled insight into spending habits that third parties can exploit, He says Susanna Copson on Big Brother Watch.
An example is China’s e-CNY system which must comply with socialist ideals which include information censorship.
It is not inconceivable that governments can limit spending on politically polarized merchants. The UK government has repeatedly denied allegations that it would program central bank money in this way.
Moreover, while large transaction limits can cause less financial stability, smaller limits may reduce the attractiveness of a central bank digital currency.
The new British crypto bill could reduce the attractiveness of CBDCs
The United Kingdom is considering a central bank digital currency with several projects testing settlement technologies and associated asset transfers.
The Bank of England ended a real-time gross settlement experiment in April to synchronize the movements of token assets between ledgers. The test precedes the wholesale settlement service that the bank will launch in spring 2024 to reduce counterparty risk.
In addition, the recently completed Rosalind project has been testing peer-to-peer hash transfers, while a new sandbox allows the exchange of digital securities via blockchain technology.
But all the tests may be a moot point after the government passed a new bill legalizing cryptocurrency trading. Cryptocurrencies, while not completely anonymous, offer some protection against surveillance.
In addition, the BoE’s inflation battle is still far from won, with core inflation reaching 7.1% in May.
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The cost of living crisis has left many citizens unable to pay bills or buy enough food. As a result, cryptocurrencies can provide an alternative monetary system to help those most affected.
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