By Huw Jones and Muvija M
LONDON (Reuters) – A “national conversation” is needed to assuage public fears that a digital version of the pound would allow the government to spy on them, Bank of England deputy governor designate Sarah Breeden said on Tuesday.
The BoE and Britain’s finance ministry have been consulting on whether and how to introduce a digital pound, probably in the second half of this decade.
But critics of the concept say a digital currency could be used by governments to track what people spend their money on, and make it harder to make payments and purchases using cash.
European Union policymakers have already sought to reassure the public that a digital euro is not a “Big Brother” surveillance project.
“I think on the back of that we need to start a national conversation, actually, because while I’m supportive of that technology, as was apparent in the responses we got to the discussion paper there’s a lot of concern about privacy,” Breeden told a hearing in parliament’s Treasury Select Committee on her appointment.
A digital pound would be the anchor for all money in the digital world to ensure trust in money, she said.
“So analytically, it’s the right thing – I can see a case for it. How you manage the privacy challenges, the role of the state – I think we are at the start of the debate on that,” Breeden said.
“The privacy concerns about programmability, I recognise those as real concerns, and what we need to do … is reassure the public on how privacy is going to be delivered, terms and conditions set in legislation, we must not assume trust in practice,” she told lawmakers.
There should be equal focus on privacy in private-sector digital currencies as well, said Breeden, who is currently an executive director at the BoE.
Eleven countries have already launched digital versions of their currencies and, like the European Central Bank, the U.S. Federal Reserve is considering doing so.
Breeden said the impact on financial stability is also a concern for her and responses to the public consultation will be published towards the end of the year.
Breeden rejected suggestions by critics of a digital currency that it would force out the availability of cash.
(Reporting by Huw Jones and Muvija M, editing by Sachin Ravikumar and Catherine Evans)
