In a study report on the future digital book, HM Treasury and the Bank of England explore the limits to be applied to the holding of this MNBC by individuals. This possible measure, although justified by technical needs, raises the question of the real ownership of his money.
UK’s future MNBC could prevent hoarding
In a joint Bank of England and HM Treasury report on the future digital pound, we learn that the savings capacity of the British could be limited. Indeed, said report studies various measures to prevent the hoarding of this central bank digital currency (MNBC), namely, taking it out of the financial system by leaving it dormant in an account for example.
One of the arguments put forward to support this limit is that the fluidity of transfers allowed by an MNBC could increase systemic risk between banksbecause cash can move quickly:
“While the digital pound must be widely available for retail use to achieve its objectives, it must also be designed in a way that manages any risk to financial and monetary stability. »
Indeed, under the Basel III Accords, banks must hold at least 8% of their clients’ assets in equity. This means that in the case of a bank run seeing a massive outflow of capital too quickly, banks could suffer a liquidity crisis in a scenario not unlike the FTX affair.
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A probably temporary measure
The choice to limit digital book holdings would be done at least during the introduction phase of the latter, in order to understand its impact on the financial system. This means that this measure could a priori be temporary if it were put in place:
“A limit on individual holdings would aim to manage these risks by limiting the extent to which deposits could exit the banking system. This is important during the introductory period as we learn about the impact of the digital pound on the economy. »
So, several levels of limits are studied. An initial ceiling of 10,000 pounds would allow 75% of British employees to receive their salary, any bonus or payment for overtime, while taking into consideration a balance already present in the account. For a limit set at 20,000 pounds, these conditions would be met for 95% of employees.
If such a ceiling in the launch phases can be agreed, he nevertheless raises the question of the real ownership of his money. It is precisely to respond to this problem that cryptocurrencies such as Bitcoin (BTC) have been created.
However, these possible measures have time to evolve, because the digital pound may not see the light of day before 2030.
👉 Also in the news – MNBC Airdrop: Chinese cities distribute $26.55 million in digital yuan
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Source: Bank of England
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