Menu Close

UK Banks Block Crypto Access, Bank of England Pushes for Digital Pound

• The Bank of England and the UK Treasury have released a consultation paper outlining their case for a retail central bank digital currency (CBDC) or “digital pound.”
• Bank executives have appeared before the Treasury Select Committee to explain their decision to block customers’ access to cryptocurrencies due to concerns over fraud and volatility.
• A roadmap unveiled by Governor Andrew Bailey and Chancellor Jeremy Hunt detailed their aim to prevent a run on banks, limiting citizens to transferring a few thousand digital pounds into their accounts.

Introduction

The Bank of England and the UK Treasury have released a consultation paper outlining their case for a retail central bank digital currency (CBDC) or “digital pound.” The paper has been reviewed by the Bank-Treasury CBDC Taskforce, which was established in April 2021. Although the bank is still considering whether to introduce the digital pound, it believes that the preparatory work is justified.

Digital Pound Consultation Paper

If introduced, the digital pound would be a form of sterling that would be used by households and businesses for their daily payments. The Bank of England and the UK Treasury will engage with stakeholders across the country to seek their views on the proposed model, according to the announcement.

Run on Banks Prevention Roadmap

Simultaneously, a roadmap unveiled by Governor Andrew Bailey and Chancellor Jeremy Hunt detailed their aim to prevent a run on banks. According to a Telegraph report, the two officials have said that consumers will be prevented from hoarding the new digital pounds issued by the Bank of England. To prevent large and rapid outflows from traditional banks, Britons will be limited to transferring a few thousand digital pounds into their accounts. The frictionless nature of digital money is seemingly seen as a potential risk to the stability of the traditional banking system. The previously mentioned consultation paper indicated that this limit could potentially be £10,000.

Blockage Of Cryptocurrencies

Just as these developments are taking place, bank CEOs in the UK are blocking customers’ access to cryptocurrencies due to concerns over fraud and volatility, according