Since 2020, the Bank of England and His Majesty's Treasury (HM Treasury) have been nurturing the idea of designing a digital currency for the U.K. populace. The government judged that a need would likely arise in the future for a digital pound to be used for household and business payments.
Early last year, the Bank and HM Treasury published a Consultation Paper to obtain feedback from the public on the proposal for a central bank digital currency (CBDC) and the design of a digital pound. The Consultation Response, published recently, contains the opinions of more than 50,000 respondents, with many of them raising serious concerns. One of these concerns centers on the safety of users' privacy.
The document says, "The main concern was that the Bank and the Government would use the technology and processes of the platform model to breach users’ privacy actively for surveillance purposes, for example, to track individuals’ spending habits."
The Central Bank digital currency concept has recently become a trending topic, with worries about user privacy violations being the most talked about. The Bank and HM Treasury validates the concerns of the people by acknowledging the fact that "digital payments leave a digital footprint and so cannot be anonymous like cash."
It also mentions that, however, "digital payments have built-in privacy safeguards, whereby law enforcement only have access to users’ personal information in limited circumstances where there is a fair and lawful basis." The report further adds that payments with a digital pound will not replace cash payments. Hence, people who prefer to make anonymous payments would still have access to that option.
In order to reduce the worries of the respondents even more, this Consultation Response assures the public that before a final decision is made regarding the design of a digital pound. Evidently, laws will have to be put in place to guarantee users' privacy protection and control of their money.
Meanwhile, the U.K. government is not the first to propose a digital version of its currency. Last year, European legislators proposed the design of a digital euro. Similar to this case, the people raised fears of privacy violations, and the officials sought to calm those fears.