Bitcoin and Ethereum rival digital pound will have saving limit
The report discloses that there are fears that consumers may hoard or shift their wealth instantly between accounts due to the frictionless nature of digital money.
According to reports, consumers would be under strict limitations by transferring just a few amounts of pounds into their accounts.
The United Kingdom is working around the clock to introduce a digital pound issued by the Central Bank of England. Based on the idea of producing a more stable alternative to Bitcoin and Ethereum, both the central bank and the UK Treasury believe that this could offer a financial advantage that could be needed in the future. According to them, the decision to introduce a digital pound could be made around the middle of the decade.
The report discloses that there are fears that consumers may hoard or shift their wealth instantly between accounts due to the frictionless nature of digital money. This could collapse banks as they may be under severe stress in such situations. A consultation paper that suggests a new form of money could be introduced by 2030 has suggested that authorities could bring it under control by blocking consumers from hoarding the digital pound. Governor Andrew Bailey and Chancellor Jeremy Hunt released a roadmap for creating this digital currency. According to reports, consumers would be under strict limitations by transferring just a few amounts of pounds into their accounts. The idea is to prevent the rapid outflow of large amounts of money from traditional high street banks.
The Treasury said:
A limit on individuals’ holdings would apply at least in the introductory phase. This would strike a balance between both encouraging use and managing risks, such as the potential for large and rapid outflows from banking deposits into digital pounds. These limits could be amended in the future. The digital pound would bear no interest
According to Mr. Hunt, protecting financial stability is their top priority. Having emphasized that cash is here to stay, Mr. Hunt and Mr. Bailey explained that CBDC offers a new payment method for consumers. UK is far advanced in researching the economic benefits of Central Bank Digital Currency (CBDC), and millions of pounds have already been spent on this course as claimed by the Bank’s annual report.
Some key figures including Former Bank of England governor Lord King have strongly disagreed with the implementation of the digital pounds. In his statement, Lord King mentioned that CBDC has no obvious benefits but offers risk. He further said that the public does not need it, and its consideration is mere because it has a ” sexy name of a digital currency.”
Follow us for the latest crypto news!
It is important to note that there will be a consultation to invite comments from businesses and the wider public in the next four months. However, decisions on its implementation will not happen until 2025.
Mr. Bailey said:
This consultation and the further work the Bank will now do will be the foundation for what would be a profound decision for the country on the way we use money.
The Digital pound would not bear any interest and would be risk-free according to the authorities. It would also be equivalent in value to the physical pound. £10 of a digital pound would be worth £10 in cash in the United Kingdom.
Crypto News Flash does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their own research before taking any actions related to cryptocurrencies. Crypto News Flash is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or services mentioned.