UK Lawmakers Urge Caution on Development of Digital Pound

According to Yahoo News, the development of a state-backed "digital pound" should proceed with caution, MPs have warned. The benefits of the currency are still unclear and, if launched, there must be systems in place to protect cash access and privacy, the Treasury Committee said in a report. The Bank of England and the Treasury have been consulting on the idea since February and are currently designing what such a system could look like. The design phase is expected to run until the middle of the decade and the currency could be launched before 2030. A central bank digital currency (CBDC) for use by households and businesses would sit alongside cash and bank deposits, rather than replacing them, but details are still being worked out. The CBDC would be directly issued by the Bank of England, just like banknotes, providing the same safety and security as cash. MPs on the Treasury Committee said there were "some potential benefits" of the system, including that it could help create innovation in payments and help the UK's global competitiveness. However, they also noted that questions remain over whether the positive impacts outweigh the risks and costs. The report warned that the new currency could be very traceable and give authorities access to a lot of new data about people, which could be misused. The committee also warned that the introduction of a CBDC could end up speeding up the demise of physical cash, something that a lot of people still rely on.