67
Views
0 CommentsThe United Kingdom is moving ahead with its roadmap for a central bank digital currency (CBDC) despite privacy concerns.
On Jan. 25, the U.K. government delivered the findings of its digital pound consultation paper laying out the potential risks that a retail CBDC might present.
The report said, “Trust is a prerequisite for a digital pound,” but acknowledged: “Many respondents expressed concerns that a digital pound could infringe on their rights. The Bank [of England] and HM Treasury recognise the strength of feeling on these matters and the need to build public trust in a digital pound.”
In an attempt to deal with those concerns and establish trust, the U.K. government is touting additional safeguards in creating and implementing its CBDC.
Firstly, a CBDC could only launch after legislation passed through both houses of U.K. parliament. Second, the Bank of England and the U.K. government would never access user data. Third, the bank would not make a digital pound programmable money. Finally, the government will safeguard cash.
These safeguards may offer comfort in the short term, but they could be eroded or removed over time.
CBDCs and British politics
With a U.K. election just around the corner, politicians from across the political divide are attempting to find the crypto policy sweet spot.
The Scottish National Party (SNP), the second-largest opposition party in the U.K. House of Commons and the governing party in Scotland, has concerns about what a central bank digital currency might mean for privacy and inclusion.
Cointelegraph spoke with SNP member of parliament (MP) and International Trade Spokesperson Richard Thomson, who said that any benefits of a CBDC cannot come at the expense of citizens’ rights.
“SNP MPs are clear that consumer protection must be at the heart of the U.K. Government’s regulatory approach to crypto assets,” said Thomson. “As a party, the SNP understands the potential benefits that a digital currency could have, including faster, cheaper and safer transfers. However, it is of paramount importance that any currency technology innovations should ensure human rights are protected prior to being introduced.”
Thomson stated that a digital pound is by no means a certainty at this stage, adding, “We are keeping a close eye on developments to ensure the potential impacts of introducing a CBDC are fully understood, and we will work to ensure a CBDC is designed in such a way that ensures citizen’s individual rights are protected.”
For now, all major U.K. parties are content to see work on the digital pound progress, even if citizens are wary about its privacy implications.
Prime Minister Rishi Sunak wants the U.K. to become a crypto asset hub and has spoken positively about CBDCs. The Labour Party, the largest party of the opposition, released a financial services paper in January supporting the Bank of England in its work on a digital pound. However, it added that a CBDC needs to ensure “threats to privacy, financial inclusion and stability are effectively mitigated.”
For his part, Thomson stated that the SNP would want legal safeguards before any CBDC launch.
“The legal framework surrounding a U.K. CBDC must work to ensure that an individual’s right to privacy is not infringed upon and ensure that financial inclusion is a prominent consideration in the creation of a CBDC,” he said.
🪙A digital penny for your thoughts?
We asked the public outside the Bank of England if they want a UK #CBDC.
Turns out, people don't want a privacy-eroding pound. pic.twitter.com/6EG3ByTbVH
— Big Brother Watch (@BigBrotherWatch) February 5, 2024
“Privacy by promise is not enough”
Big Brother Watch — a British civil liberties group that has campaigned against any introduction of a CBDC — remains skeptical despite the latest assurances from the government.
Susannah Copson, legal and policy officer for Big Brother Watch, told Cointelegraph that the government has yet to make a positive case for its CBDC, but the dangers are clear:
“It’s puzzling that the Government is pushing ahead with plans to pilot a digital pound despite failing to explain to the public or parliament why one is needed. It’s a solution in search of a problem that could pose serious risks of privacy intrusion, security breaches and inequality in the United Kingdom.”
During the consultation phase, Big Brother Watch encouraged U.K. citizens to contact the government and express their concerns. As Copson sees it, their campaign is shaping the future discussion of CBDCs.
“The government’s new commitment to introduce laws that would prohibit the state programming digital pounds to control how they’re spent and to protect financial privacy shows that the 50,000 of us that responded to the consultation have had a real impact, although we await further detail to see how robust the legal and technological protections are,” she said.
Copson added, “We still have serious privacy concerns about a digital pound becoming a ‘spycoin’ since the government also said today that a U.K. CBDC, unlike cash, will not be anonymous to enable surveillance and financial policing.”
Copson said Big Brother Watch continues to have concerns about a raft of U.K. policies they believe are eroding citizen’s rights. For that reason, “the public will rightly have very little trust in the Government’s respect for financial privacy.”
“Privacy by promise is not enough. The Treasury and the Bank of England will need to go further to explain why the U.K. needs a CBDC and how the public’s rights, equality and civil liberties would be protected.”
Source: https://cointelegraph.com/news/privacy-digital-pound-cbdc-united-kingdom
