Deputy Governor Jon Cunliffe of the Bank of England (BOE) stated in a speech on Thursday that the BOE received more than 50,000 responses to its consultation on a digital pound.Cunliffe said at a conference hosted by the Federal Reserve Board in Washington, D.C. that the majority of attendees expressed concerns over privacy, programability, and the decline of cash.The central bank stated that a central bank digital currency (CBDC) will probably be required even though it hasn’t made a formal decision on whether to issue one yet. The digital pound consultation was open from February to June.
When making electronic payments, users of the digital pound will have access to the same degree of privacy as they do now.In an attempt to allay worries, he added that the BOE would not view personal information.Respondents were worried that the central bank would limit the functionality of the digital pound and make it programmable, but Cunliffe assured them that would not occur.
“It would be for private sector firms to develop and offer, for user consent, payment services involving greater programmability,” he said. “Criticisms of the digital pound have ranged from concerns that it would be adopted at a scale and pace that would disintermediate the banking system and threaten financial stability, to, at the same time, concerns that there would be no use for it and it would be a ‘solution looking for a problem,'” said Cunliffe, who is leaving his Bank of England role next week.
In February, bankers expressed concern that a digital pound would result in a cash and digital money system divided into two tiers.He said that legislation ensuring the availability of physical currency was recently passed by the government.Cunliffe stated that while the CBDC’s general model has garnered general support, the central bank will improve take-up and holding limit estimates.At least during the initial phase, it was previously suggested that people wouldn’t be allowed to possess more than 10,000 ($12,000) to 20,000 pounds of CBDC.Cunliffe hinted that regulations might disallow more decentralized models and promised a discussion paper on its regime “very soon” for major stablecoins, or cryptocurrencies whose value is linked to other assets like the pound.
The central bank “will require a legal entity that can be identified as the payment system operator and held responsible for the end-to-end management of risks,” he said. “It is not clear that use of public, permissionless transfer mechanisms, at least with current technology, would be consistent with this requirement.”
Stablecoins will probably be subject to limits similar to those envisioned for the digital pound under the regime, and banks issuing them should establish a distinct legal entity with distinct branding in order to “avoid confusion among consumers and so avoid contagion in a stress between different forms of money,” he said.