CBDC Introduction in U.K. Could Lead to Increased Government Oversight
The U.K. government’s plans to develop and launch a central bank digital currency (CBDC) are drawing disapproval from the community. Members of the Tax Reform Council of the U.K. (TRC) believe that the digital pound threatens the privacy of citizens.
The Tax Reform Council of the U.K. (TRC) opposed the Bank of England’s plans to develop a CBDC. The TRC says the digital pound would not only undermine the country’s tax system, but also threaten the stability of the entire monetary system.
According to John Chown, Co-Founder of the Institute for Fiscal Studies and the TRC Member, implementing the CBDC will lead to increased government surveillance in England and greater intrusion by tax authorities into private life. Also, the release of the digital pound would raise cybersecurity risks that pose a potential threat to the entire United Kingdom financial system.
The opinion of the TRC members echoes the concerns of the British Bitcoin community, which has previously criticized the government for its CBDC initiatives. Jordan Walker, Co-Founder of the U.K.’s Bitcoin Collective, says implementing the CBDC in Britain would result in citizens being forced to hand over control of their money to the government and the central bank. Such an approach, he argued, would tie “the monetary system even closer to the political system,” which must be kept separate.
Any CBDC transaction would be recorded in the Bank of England’s private ledger. This would give the tax inspector unprecedented access to the financial history of individuals. The TRC members thus claim that the digital pound would increase government surveillance and threaten the privacy of the country’s citizens. The Bitcoin Policy Institute (BPI) voiced similar concerns about the CBDC in the United States, suggesting fiat-backed stablecoins issued by private commercial banks as an alternative.
Recall that the British authorities recognized the need to issue the digital pound, but the final decision on the issue won’t be made until 2025. The Bank of England will study the potential impact of the CBDC on the banking system’s stability and conduct a series of experiments.