Lord’s Sceptical about CBDCs

The UK’s second parliamentary chamber, the House of Lords, has reviewed the work of the Bank of England and Her Majesty’s Treasury Taskforce that is working on the potential for introducing a retail Central Bank Digital Currency (CBDC) in the UK. With the report title ‘CBDCs: a solution in search of a problem?’ ¹, it would be fair to say the report was unconvinced about the needs for a CBDC. It lays out a series of searching questions which apply equally to any central bank working in this area.

The paper starts by stating the two reasons for introducing a retail CBDC are to manage the excessive market power of ‘Big Tech’ companies should they enter payments with stablecoins and the decline in the use of cash. It then puts forward three key areas of risk, privacy, financial stability in a crisis and a centralised point of failure, the CBDC ledger as, a target for criminals and hostile foreign states.