Weird & wonderful money
Volume 62, Number 3, March 2024
A digital future? THE Bank of England Museum in Threadneedle Street, London, is holding a new exhibition entitled The Future of Money which starts on February 28. In addition to showcasing the new King Charles III banknotes (see “Banknote News”), it features a look at the new “digital pound” that the Bank of England is working on. In January of this year, the Bank published their response to the year-long consultation on the digital pound (otherwise known as a Central Bank Digital Currency or CBDC) and their website (www.bankofengland.co.uk) highlights how it might be used. They are, it must be said, quick to point out that if a CBDC is introduced, it is not intended to replace cash and that cash is still very important to the economy; the responses to the consultation and the way the bank suggests a CBDC might be used pose more questions than they answer. The Bank gives an illustration of someone’s average day using CBDC and it looks like this (taken direct from their website)—7am: “Check your balance on the digital pound wallet; 10am: Buy a cup of tea with digital pounds using your smartphone, just tap it on the same device used for credit and debit cards; 3pm: Pay the electrician in digital pounds—both of you get an instant notification that payment is complete; 6pm: Order groceries online and pay for them using the digital pound option on the website; 8pm: Transfer money from your bank account into your digital pound wallet”. Now, forgive my cynicism but what about any of that requires a digital pound? All of that can be accomplished with a standard debit card transaction. Buy tea, pay your electrician, order groceries; all of these things can be—and are—being done every day with the technology we already have. For most of us, our money is digital anyway, our wages/pensions, etc. get paid directly into the bank, we use cards to spend that money and, unless we go to an ATM, never get to see the physical cash, so why are the Bank of England bothering with a digital pound at all? Bear in mind the CBDC isn’t a “crypto currency” like Bitcoin, it’s simply supposed to be a digital version of the pound we already have, but (as I have already pointed out) most of our transactions these days are digital anyway so what advantage does a CBDC offer us? The difference between a digital pound and a “normal” pound is simple. A digital pound can, in theory, be fully tracked and is programmable (although the Bank insists it will only be programmable by the end user not the Government or the Bank). A digital pound could be manipulated; what you spend and where you spend it could be monitored and, perhaps, controlled, and whilst debit card transactions can be monitored too, there’s far less ability to control them and, of course, no ability at all to monitor or control cash. Is it for this reason that a digital pound is being created? The Bank states that new laws will be brought in to address privacy concerns, but the fact that a CBDC can be monitored and controlled at all sets alarm bells off for me. All it would take is emergency legislation in reaction to a crisis such as a pandemic for those “new laws” to be swept aside. Want people to be locked down again? Simply prevent them from buying fuel for their cars or check where they are compared with where they should be when they next spend something . . . Yes, I know I sound like a conspiracy theorist, I know you may be fashioning a tinfoil hat for me as we speak, but I cannot for the life of me work out why we would embrace a digital pound, actually adding an extra step into our everyday transactions (topping up our digital wallets from our bank accounts at 8pm!) when it offers no advantages over what we already have. So again , forgive my cynicism but I’m not entirely convinced that this digital pound isn’t yet another step on the road towards a cashless society and those of you who read this column regularly will know that’s not something I’m happy to accept—if only because such a move can only be detrimental to the hobby we all love.
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