UK Lawmakers Warn of Retail CBDC Risks
| UK Lawmakers Warn of Retail CBDC Risks | |
|---|---|
| Short Title | Retail CBDC on Hold in UK |
| Location | United Kingdom |
| Date | 1st December 2023 |
| Solove Harm | Disclosure, Decisional Interference |
| Information | Identifying, Transactional |
| Threat Actors | UK Government, Hackers, Companies |
| Individuals | |
| Affected | All individuals who use the retail CBDC |
| High Risk Groups | Financially vulnerable individuals, Individuals who rely on physical cash |
| Tangible Harms | Increased bank runs, Financial exclusion, Higher interest rates on bank loans |
The Parliamentary Treasury Committee of the United Kingdom has cautioned against the possible hazards associated with creating a retail central bank digital currency, sometimes known as a "digital pound." The Committee is worried that dangers to financial inclusion, privacy, and stability could arise from a retail CBDC. A few major worries are rising bank runs, higher bank loan interest rates, and improper use of personal and financial information. Prior to implementation, the Committee has demanded that a comprehensive cost-benefit study of a retail CBDC be conducted. Additionally, it has pushed H.M. Treasury and the Bank of England to address the issues brought out in its report.
Description
Damages from disclosure: There is a chance that the government will obtain and reveal personal financial transaction information, which could cause shame, humiliation, and reputational harm. Consequences of surveillance: A retail CBDC raises privacy and control concerns by giving the government access to people's financial information and spending patterns. Decisional harms: A retail CBDC might provide the government access to people's financial information to decide whether to grant them benefits, credit, or even jobs. This could result in unjust treatment and discrimination against some people. Data damages include identity theft, fraud, and other financial losses due to the possibility of selling personal and financial information to unaffiliated parties, using it for discriminating purposes, or even being the target of hacking or data breaches. The research emphasizes how crucial it is to address these hazards associated with Solove before putting in place a retail CBDC. It highlights the necessity of stringent privacy laws, data reduction strategies, and unambiguous restrictions on government access to data.
Laws and Regulations
Data Protection Act 2018
Electronic Money Regulations 2011
Financial Services Act 2012
Sources
[https://cryptoslate.com/uk-lawmakers-wary-of-launching-retail-cbdc-due-to-privacy-financial-stability-concerns/%0Ahttps://www.ukfinance.org.uk/policy-and-guidance/reports-publications/retail-cbdc-threat-or-opportunity-payments-industry https://cryptoslate.com/uk-lawmakers-wary-of-launching-retail-cbdc-due-to-privacy-financial-stability-concerns/ https://www.ukfinance.org.uk/policy-and-guidance/reports-publications/retail-cbdc-threat-or-opportunity-payments-industry]