Last week, UK Finance – Britain’s leading financial services trade association – responded to the Bank of England’s recent digital pound consultation. It is particularly worried about the high holding limits currently envisaged for the central bank digital currency (CBDC) project.
The organization that absorbed the British Bankers’ Association in 2017 argued that the proposed holding limits of £10-£20,000 ($13-$26,000) may introduce more risks than benefits to the financial system. They also want to see commercial bank digital currencies (deposit tokens) supported simultaneously and even considered as a potential CBDC alternative.
The UK Finance’s response covered many issues but puts the economic and financial stability impacts of holding limits at the top of the list. It’s concerned that a flood of money shifting from banks to CBDC could impact the ability of banks to extend loans. And it wants greater clarity on the holdings for business customers.
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