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UK Lords Economic Affairs Committee Publishes disparaging Report on "Britcoin"

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The lords economic affairs committee recently published its report on central bank digital currencies (cbdcs), present their findings on digital currency and describe what they perceive to be "significant risks" to the british economy. 

the report titled 'central bank digital currencies: a solution in search of a problem?’ is the synthesis of the views by the committee of peers alongside several key witnesses including bank of england governor andrew bailey and his deputy sir john cunliffe, economic secretary to the treasury john glen and senior treasury official charles roxburgh.

The introduction of a cbdc will 'inevitably lead to some disintermediation of the banking sector,' states the report, he went on to recommend that the bank of england conduct further studies to assess the effects on the banking system. 

Lord Forsyth, the committee's chair, was concerned about the alleged benefits of a CBDC, adding that they are "overestimated, or could be achieved by other means with fewer risks. In the UK, a digital central bank currency is a solution in the search for a problem. '

Although the committee recognized the need for an investigation into cbdcs, the report focused on the potential risks to the introduction of a cbdc, in particular with regard to financial stability and privacy protection. 

“we have yet to hear a convincing case for why the uk needs a retail cbdc. while a cbdc may provide some advantages on speed of settlement and cheaper and faster cross-border payments, it would present significant challenges for financial stability and the protection of privacy. furthermore, a lot of work remains to find workable solutions which do not entail difficult design trade-offs which may make a cbdc unattractive. earlier in this report, we put several questions to the joint taskforce which need to be answered”

The report concludes that the committee invites governments and financial oversight bodies to begin identifying ways to regulate crypto issuers. 

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 1/13/2022

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