Citizens in the United Kingdom could be facing tight transaction limits as low as £ 20,000 amidst fear of a bank run.
Banking authorities in the UK have decided to continue with their plans to launch a digital version of the pound. On Monday, The bank of England released a consultation paper highlighting this development’s details. According to the document, the stipulated year of execution is 2030.
England’s Apex Bank Fears Possible Bank Run
Per the document, the bank of England proposes a user limit between “£10,000- £20,000” on the digital pound. This measure aims at curbing a possible disruption of the country’s monetary and financial stability. However, the acceptance of this development is yet to be determined as authorities fear that an unrestricted use of digital currency puts the country’s economy at risk. They emphasize that it could cause massive and rapid outflows from bank deposits which would be unhealthy for the money market. The apex bank proposes a limit on individual holdings to curtail this risk proactively.
“A limit on individuals’ holdings would apply at least in the introductory phase,” the document reads. “This would strike a balance between encouraging use and managing risks, such as the potential for large and rapid outflows from banking deposits into digital pounds. These limits could be amended in the future.”
The UK’s introduction of a central bank digital currency is among many other countries that have indicated an interest in digitizing their money. Even African countries like Nigeria and Uganda have made a significant efforts in this area.
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