Government agrees to Committee request for privacy protections to be enshrined in digital pound legislation

• Treasury Committee

The Committee has previously urged caution regarding these proposals, calling for the Bank of England and HM Treasury to address data privacy concerns before considering the implementation of a retail digital pound.  

 

Specifically, the Committee recommended that any primary legislation used to introduce a digital pound should not allow the Government or Bank of England to use the data from a digital pound for any purposes beyond those already permitted for law enforcement. In its response, the Government confirmed they would align with the recommendation and committed to guaranteeing users’ privacy in primary legislation if a digital pound were launched. 

 

MPs also recommended that the Bank of England increased transparency around the costs of its work on the digital pound, requesting the Bank of England reports expenditure on the digital pound as a separate line item in its annual report. The Bank of England acknowledged this concern and said it would consider how it reports the project’s costs. 

 

Other recommendations to which the Government has responded include a request for further detail regarding the criteria that will be used to determine whether a digital pound is launched and the possibility of it paying interest. 

 

In its report, the Committee also highlighted possible risks related to financial stability and the need to improve financial inclusion, including by maintaining access to cash.

 

Chair's comment 

 

Commenting on the Government response, Harriett Baldwin MP, Chair of the Treasury Committee said: 

 

“Launching a retail digital pound will be a major technology project, and it is vital that this is only undertaken if the benefits are shown to clearly outweigh the risks. That’s why the Treasury Committee undertook such an in-depth inquiry which brought together insights from a number of prominent experts in the field. 

 

One of the key risks is around the potential misuse of data, which is why we recommended privacy protections be enshrined in primary legislation should a digital pound be introduced. I am pleased that the Government has agreed to take this recommendation forward, and that they are taking the concerns around privacy as seriously as we would expect.

 

The Committee looks forward to continuing to scrutinise and stress-test this work on behalf of Parliament and the British public.”

Further information

• Inquiry: The crypto-asset industry
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