The erosion of financial privacy and loss of access to cash have been among the key concerns United Kingdom citizens have expressed regarding a digital pound. However, as a general election edges closer, politics are coming into play, with each faction treading a fine line between pushing the U.K. to financial technology leadership and appeasing the electorate.
In a report published three weeks ago, the Bank of England (BoE) revealed that it had received over 50,000 responses to its central bank digital currency (CBDC) consultation, and privacy and trust were the top concerns.
To foster trust, the central bank will implement safeguards before any potential launch. These include ensuring that intermediaries like commercial banks anonymize personal data before the BoE accesses it. The digital pound would also not be programmable.
However, as the general election edges closer, the development of a CBDC in the U.K. is taking a political life of its own. The opposition Labour Party, which is projected to enjoy a landslide win, has pledged to support the development of a digital pound, but it has called on the BoE to protect the financial freedom of the citizens.
The Scottish National Party (SNP), which has the third-highest seats in the U.K. House of Commons, is more skeptical. Speaking to one news outlet, SNP Member of Parliament Richard Thompson said the party is concerned about what a CBDC means for citizens’ rights.
Thompson, who serves as the party’s spokesperson for Business and Trade, said that protecting consumers “must be at the heart of the U.K. Government’s regulatory approach.”
“As a party, the SNP understands the potential benefits that a digital currency could have, including faster, cheaper, and safer transfers. However, it is of paramount importance that any currency technology innovations should ensure human rights are protected prior to being introduced,” the MP stated.
Members of the U.K.’s civil society are divided on the CBDC. CryptoUK, a self-regulatory trade association, praised the BoE’s approach and continued public consultation.
“…we are pleased to see that primary legislation would guarantee users’ privacy and control of a digital pound,” it said in a statement.
Big Brother Watch, which campaigns for civil liberties and privacy, remains unconvinced by the government’s approach. A spokesperson said the organization believes the digital pound would be a ‘spy coin‘ “since the government said that, unlike cash, [it] will not be anonymous to enable surveillance and financial policing.”
“Privacy by promise is not enough. The Treasury and the Bank of England will need to go further to explain why the U.K. needs a CBDC and how the public’s rights, equality, and civil liberties would be protected,” added Susan Copson, the organization’s head of legal and policy affairs.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch CBDCs: The rules will apply, like it or not
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