“New cryptocurrencies have generated a great deal of excitement, and concern, across the globe. The Government and Bank of England must carefully consider the implications of creating a new, state-backed, form of digital cash,” said the Chair of the Committee, Lord Forsyth of Drumlean, in his statement.
A digital pound would be a third form of money alongside bank accounts and physical cash. What is being investigated is a general CBDC which would be made available to businesses and consumers.
The Economic Affairs Committee will take evidence on the main reasons for a CBDC and its possible risks. It will also examine how a CBDC might impact the role of the central bank, monetary policy and financial sector. Participants have until 15 October to submit evidence.
“To inform our work we want to hear from as broad a range of people as possible. If you have a view on any aspect of Central Bank Digital Currencies, look at our call for evidence and let us know what you think,” said Lord Forsyth.
The request for evidence follows a steady trail of developments in the UK’s CBDC research. In March, the Bank of England released a research roadmap exploring the impact of declining cash usage on CBDC demand.
Meanwhile, the Bank has just finished a round of external consultation. June also saw the Bank unveil a paper on new forms of digital money following the establishment of a taskforce with HM Treasury that has begun seeking out a diverse set of views from financial institutions, merchants, businesses and consumers.