The launch of a state-backed digital currency from the Bank of England has been held back by “concern about privacy”, according to a senior member of the project.
Speaking to the Treasury Select Committee, Sarah Breeden – set to become the deputy governor for financial stability – warned that there must be a “national conversation” about the merits of digital currencies to overcome public scepticism.
The Treasury first publicly considered the creation of a stablecoin, commonly referred to as the ‘digital pound’, in January, despite many high-profile crashes in the wider cryptocurrency market.
After several rounds of consultations and research, it was determined that the creation of the UK digital coin was “likely”, however, further consultation rounds were approved to determine the merits and risks.
According to Breeden, one such risk that the consultations have identified is the perception from the public that a centralised digital currency would give the state too much control over consumers’ personal finances.
“While I am supportive and see its merits, it was apparent in the responses that we got to the discussion paper that there is a lot of concern about privacy,” Breeden told the committee.
“What we need to do with the Treasury and Parliament is to reassure the public about how privacy is going to be delivered. We must not assume trust in practice. We need to demonstrate that whatever parliament has decided is the right boundary and one that we will deliver.”
The Bank of England and the Treasury are expected to make the final call by 2025.