A House of Lords committee has concluded there is "no convincing case" for introducing a UK Central Bank Digital Currency (CBDC).

The Lords Economic Affairs Committee said a CBDC "would have far-reaching consequences for households, businesses, and the monetary system" and could also pose "significant risks" for banks.

The news comes after The Bank of England and HM Treasury announced a consultation to explore the potential for a UK CBDC in September.

The CBDC, which would exist alongside cash and bank deposits, would act as a new form of digital money, and be issued by the UK central bank.

The committee said that “while a CBDC may provide some advantages, it could present significant challenges for financial stability and the protection of privacy.”

“These risks include state surveillance of people’s spending choices, financial instability as people convert bank deposits to CBDC during periods of economic stress, an increase in central bank power without sufficient scrutiny, and the creation of a centralised point of failure that would be a target for hostile nation state or criminal actors,” said the report.

However, the peers recognised the importance of continuing to investigate the benefits of a CBDC and encouraged the Bank of England’s team to explore it further.

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