>>>The #DigitalPound is undergoing some scrutiny. #UK’s House of Commons recommends the Bank of England and the HM Treasury to conduct more research on launching this retail #CBDC as #risks prevail:

"Risk Remains an Issue with CBDCs

As more banks look into developing their own CBDCs, they must be aware of the potential risks, such as a drop in bank deposits. A decline in bank deposits means that banks will not be able to lend money as it relies on these deposits to fuel lending activities. Less money to lend to consumers and businesses could lead to an obstruction to economic growth. Also, deposits are another income stream for banks as they charge interest on these loans. A reduction in deposits would mean that a bank’s profitability will be impacted.

Another issue with CBDCs is the perceived end of financial privacy and anonymity. When consumers use CBDCs for their transactions, all transaction data will be easily accessed by the central bank. They will know the amount of money spent, where it was spent. As all user information is centralized and easily accessible for government or criminal surveillance, some fear that it can be used to track user movements, monitor their spending habits, and even receive targeted advertising."<<<

Patrick Schüffel via linkedin 🧡

(source paymentsjournal)