British lawmakers see risks in issuing and using a digital pound as the talks about releasing one are yet to happen. The members of parliament are already doubtful that this could harm financial stability and can harm privacy so let’s take a closer look at today’s cryptocurrency news and analysis.
In order to fight the private sector from gaining a huge step ahead over digital payments and the fall of cash use accelerated in some cases because of the COVID pandemic, the central banks around the world started focusing on CBDCs. CBDCs are a virtual form of money and they represent an electronic record of digital tokens of a country’s official currency. The meeting of the British lawmakers and the central bank to discuss whether to move ahead on a central bank digital currency will be held later this year.
Accoridng to the reports by the UK House of Lords committee, the daily use of an e-pound could see people transfer cash from commercial banks accounts to crypto wallets that could spark financial instability and economic stress, and also increase borrowing costs. The use of the digital pound will allow the central banks to monitor spending which can also harm privacy. The Economic Affairs Committee chair Michael Forsyth said:
“We were really concerned by a number of the risks that are posed by the introduction of a CBDC.”
He also added that the regulation could be better to fight the threat of crypto issued by Big Tech companies rather than introducing a digital pound that can carry numerous risks. On a potentially positive note, the report noted that securities trading and settlement could become much more efficient with the wholesale use of CBDC to transfer larger sums. Britain’s central bank and finance ministry should consult on the advantages over the expansion of these systems but although talks are yet to happen, Britain’s parliament has the final say on the decision of an e-pound.
The Bahamas on the other hand became the first country to launch CBDCs since 2020 dubbed the Sand dollar. In Tanzania, there are plans to follow Nigeria’s steps who became the African country to release their own CBDC version called eNaira. The Bank of Tanzania is looking for ways to introduce a CBDC to its monetary system and enhance the domestic payment system:
“To ensure that our country is not left behind by the adoption of central bank digital currencies, the Bank of Tanzania has already begun preparations to have its own CBDC.”
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