The UK government has warned that retail customers should not hold digital versions of the pound sterling, as the risk of bank runs is too high.
The Chief Economic Advisor to the UK treasury, Dr. Andrew Bailey, advised that retail customers should not hold more than £100 in digital pounds. He warned that the risk of a bank run would be “too great” if customers held more than that.
The Treasury is currently considering plans to launch a new digital currency backed by the pound, but this has not been green-lighted yet and the Treasury is still in discussion with the Bank of England about the new currency.
The comments come after it was revealed that the Bank of England was looking into the possibility of introducing a new digital currency as part of its attempts to modernise the banking system and make payments more secure.
It is believed that the new digital currency would be similar to cryptocurrencies such as Bitcoin, but it would be backed by the pound and regulated by the Bank of England. It would also allow for real-time tracking of payments, which could make it easier for the government to track payments made by citizens.
However, Bailey warned that a digital version of the pound sterling is still a few years away and may never happen if the risk of bank runs is too high. He also said that the introduction of such a currency would have to be carefully managed in order to make its introduction successful.
