British Lawmakers Say a CBDC Is Likely to Hurt Financial Stability — Digital Pound Benefits Overstated – Fintech Bitcoin News

British legislators claim that the central bank’s digital currency (CBDC), is likely to increase borrowing costs and threaten financial stability. According to them, the potential benefits of a digital currency are exaggerated.

Privacy breach

According to a report, British lawmakers believe that using a digital currency from the central bank for making payments may lead to financial instability and higher borrowing costs. They also believe that the CBDC may be used more frequently by the central bank, allowing it to track spending and thereby erode privacy.

A Reuters report claims that the legislators believe CBDC has potential benefits but are not as effective in countering the threats posed to cryptocurrencies. Michael Forsyth is one of the legislators who was quoted in the report. He added:

A number of risks posed by CBDC were very concerning to us.

Forsyth, who is the Economic Affairs Committee chairperson, also said the touted benefits of having a CBDC had been “overstated.” He suggested these benefits can still be achieved with a less risky alternative such as the regulation of crypto-issuing tech companies.

The Lawmakers Demand Parliament Have A Say

In a report tabled by Forsyth’s committee to the British parliament, the lawmakers nevertheless acknowledge that a wholesale CBDC, which can be used to move large funds, will potentially result in more efficient securities trading and settlement. But, lawmakers insist that the central banking and finance ministry weigh the advantages of CBDC over expanding existing systems.

The report quotes Forsyth as arguing that the lawmakers should have the right to make sure the CBDC is issued by the Bank of England or the U.K Treasury.

“[A CBDC could have]There are far reaching consequences for businesses, households and the monetary sector. That needs to be approved by parliament,” Forsyth is quoted stating.

Do you agree with the British lawmakers’ views on CBDCs? Comment below to let us know your thoughts.

Terence Zimwara

Terence Zimwara, a Zimbabwean journalist, writer and author who has been awarded the Zimbabwe Booker Prize. He is a prolific writer on the economic woes of African countries, as well as digital currencies that can be used to provide an escape path for Africans.