UK Finance proposes capping digital pound holdings at £5,000

UK Finance — the trade association of the UK banking and financial services sector — believes that banks should hold no more than £5,000 in the digital pound.

The organisation argues that otherwise this would lead to a mass withdrawal of deposits from financial institutions.

The UK Finance statement is a response to the UK government’s recommendations, which proposed setting a cap on holdings in the digital pound at £10,000–£20,000.

The association added that authorities should set clear objectives for the use of the new means of payment.

“From the consultation, it is unclear what role the central bank digital currency should play in the market,” UK Finance said.

Earlier this year in the United Kingdom a consultation document was published, in which the functions of the future CBDC were described.

According to it, the digital pound would be used on a par with cash “for everyday payments by households and businesses.”

Earlier in February, the UK Chancellor allowed the launch of a local digital currency after 2025.

Previously, the Bank of England stated that the digital pound could operate without blockchain.