U.K. digital pound poses more risks than benefits, lawmakers say in report

There may be some benefits to the introduction of a "wholesale" central bank digital currency for use between financial institutions, but would likely introduce risks that could lead to financial instability, the U.K.'s House of Lords said in a report. The adoption of a U.K. CBDC would likely lead to people moving their money from bank deposits to digital wallets, which could increase borrowing costs during times of economic stress as an important source of lenders' funding would dry up, the report said. Other major risks include privacy concerns and cybersecurity risks. "The centralized CBDC ledger, which would be a critical piece of national infrastructure, could be a target for attack from hostile state and non-state actors," the report said. Overall, the chamber of unelected lawmakers concludes "there is no convincing case why the U.K. needs a central bank digital currency. The committee found that while a CBDC may provide some