New laws ‘guarantee’ privacy for digital pound users amid Britcoin concerns
The Treasury and Bank of England are attempting to smooth concerns over snooping on digital pound spending, with upcoming legislation set to protect user privacy.
Following public resistance to the proposed central bank digital currency (CBDC) nicknamed ‘Britcoin’, officials plan to assure Parliament that personal data access will be off-limits.
CBDC is a digital form of cash which will be created by the Bank of England, unlike existing digital payments which are created through the private sector. It is not intended to replace cash.
The Bank suggests it is “likely to be needed in future” as digital payments become ever more important in the economy.
The future legislation will “guarantee” that both the Treasury and the Bank are unable to monitor spending habits or access individual data tied to the digital pound.
In response to consultations, more than 50,000 people expressed concerns over privacy and the possibility of cash disappearing with the proposed introduction of a digital pound by 2030.
The upcoming laws will also likely keep spending limits between £10,000 to £20,000, despite worries that letting people spend that much could trigger bank runs and risk lenders running out of cash.
In the banking sector, there are concerns that a digital pound could reduce the level of deposits at commercial banks, having knock-on effects on lending in the wider economy.
Modelling by the Bank of England suggests that up to 20 per cent of commercial bank deposits could move out of bank accounts into digital pound wallets if the government adopts CBDC.
According to its annual report, the Bank has spent £13m across two years mulling over the digital pound.