| 12 April 2024, Friday |

Britons face 20,000 digital pound cap under Bank of England plan

According to Bank of England Deputy Governor Jon Cunliffe, if Britain adopts a digital currency, each citizen would be limited to 20,000 digital pounds ($24,000).

The British government announced on Monday that although no decision has been taken, it and the BoE were continuing to work on a potential digital pound that might coming into use in the second part of this decade and be stored in a “wallet” given by banks.

“We propose a limit of between 10,000 pounds and 20,000 pounds per individual as the appropriate balance between managing risks and supporting wide usability of the digital pound,” Cunliffe said in a speech.

A limit of 10,000 pounds would mean that three quarters of people could receive their pay in digital pounds as well as holding pre-existing balances in the same account, while a 20,000 pound limit would allow almost everyone to use digital pounds for day-to-day transactions, Cunliffe said.

Money above the cap would be “swept” into a customer’s commercial bank account given that a digital pound would not be a means for storing wealth, he told members of UK Finance, a banking industry body.

“At the other end, you could say I need a little wallet full of internet cash to buy things on Amazon,” Cunliffe added.

Central banks across the world are studying digital currencies, with the European Union due to publish a draft law in May setting out a legal framework for a potential digital euro.

The European Central Bank will decide this fall whether to move forward with a digital euro, but the bill would need to be ratified by EU member states and the European Parliament.

Whether a digital euro would have legal tender status, which would allow it to be used to satisfy a debt in court, is a crucial issue that needs to be decided, according to Burkhard Balz, executive board member of Germany’s Bundesbank, who spoke at a conference on Tuesday. A digital pound would have the same legal standing as cash, according to Cunliffe.

  • Reuters