MNI BRIEF: UK Lawmakers Raise Doubts Over Need For BOE CBDC

It is a matter of debate as whether the Bank of England needs to develop a retail central bank digital currency, according to the House of Lords Economic Affairs Committee, who warn a CBDC could both enhance the BOE's power and undermine traditional retail banking.

The BOE is currently working with the Treasury on a CBDC but the Lords committee held hearings into the issue and concluded that it had "yet to hear a convincing case for why the UK needs a retail CBDC." They raised concerns over the risks one could pose to financial stability if it acted as a competitor to retail bank deposits.

Despite the denials of the current BOE Governor Andrew Bailey the lords said that a CBDC could be used to facilitate unconventional monetary policy, notably making deeper negative interest rates more plausible. The Lords report stated that CBDC linked policy "measures may increase the Bank of England’s role and influence in the economy and any changes to the Bank’s monetary policy toolkit should be scrutinised carefully."