Digital Pound Holdings Could Be Limited to £10,000, Central Bank Says
U.K. citizens could be limited to holding £10,000 ($11,900) each in a new digital pound, as the Bank of England seeks to avoid a new central bank digital currency undermining the banking system.
The central bank appeared to favor centralized databases over the blockchain as it seeks a technological basis for the digital currency, which officials said on Monday would be likely to be needed.
"The Bank would place some limits on holdings of digital pounds, at least during its introductory period," to avoid citizens hoarding their assets in safe central bank money and skirting around the commercial banking system, a consultation published today by the central bank and U.K. Treasury said. "We judge that a limit of between £10,000 and £20,000 per individual is likely to strike an appropriate balance between managing risks and supporting wide usability of the digital pound."
"Distributed ledger technologies and blockchain-based solutions might have advantages in guaranteeing consistency and resilience, but they also present privacy, scalability and security challenges," a technical paper published by the central bank said. "Centrally governed, distributed database technologies might achieve the ledger requirements without such limitations. Therefore, these technologies might be appropriate for the core ledger design."
This is a developing story and will be updated.