UK Bitcoin community reacts to incoming CBDC and digital…
The UK Government's economic and finance ministry, HM Treasury, is recruiting for a Head of central bank digital currency (CBDC) to lead the development of a digital pound. The work is described as “Important, complex, and cross-cutting” and will “require extensive engagement across and beyond the HM Treasury.”
According to the Linkedin post, the Treasury and the Bank of England are working together through the CBDC Taskforce to explore the case for a digital pound. The role of the Head of CBDC may bring the UK government closer to its aim of rolling out a CBDC.
Danny Scott, CEO of a UK-based Bitcoin (BTC) company, CoinCorner, told Cointelegraph that a CBDC could be missing the “Actual real-world use and purpose–which is what we often see.”
“For those that have been in the industry for a cycle or two, we've seen the hypes come and go, altcoins, blockchain, distributed ledger, ICOs, DeFi, NFTs. You see large companies come along and jump on the latest hype to avoid looking like they're falling behind, it falls under R&D and exploratory for most, which is perfectly understandable.”
Scott, who has been working and building in the Bitcoin space for over a decade, explained that sometimes the public could misinterpret the research and development projects in the crypto space and perhaps confuse them with useful real-world solutions.
“A CBDC (digital pound) doesn't fall far from this, many countries around the world are exploring this and trying to understand the benefits of this over the current system, fair enough, this will happen.”
Indeed the move towards a digital pound matches the trend among central banks worldwide to explore the potential of CBDCs. In Europe, the European Central Bank (ECB) has been actively studying the future of a digital euro, and several countries, including Sweden and Denmark, are also exploring their own digital currencies.
CBDCs claim to offer a number of benefits, including improved financial inclusion, reduced costs for businesses and consumers, and increased security and efficiency in the payment system.
However, El Salvador banked as much as 70% of its unbanked population with the introduction of Bitcoin as legal tender, while countries such as Nigeria, Ghana and Kenya can now receive money from around the world to a mobile phone or Bitcoin exchange account.
Moreover, there are potential risks to introducing a new digital currency. James Dewar, Partner at UK Bitcoin merchant solution Bridge2Bitcoin and a Director at Laser Eyes Cards, told Cointelegraph that the “Introduction of a CBDC would itself present different challenges and risks than Bitcoin,” as the CBDC requires “trust in third parties, Central Banks and Governments, to not abuse the supply of the currency.”
“This risk applies at the macro level as it does today, but more worryingly with a CBDC on the ability for a government or its agencies to monitor and censor individual spending. This is a huge risk for the rights of freedom and property ownership within our societies.”
He raises the question, “Whilst we may trust one government or another, do we as citizens trust all future governments, of whatever color, with this power?” Tony Yates, a former senior adviser to the Bank of England, has spoken out against CBDCs. Resonating Dewar's thoughts, he questioned the motivations behind the global rollouts of CBDCs, calling them “suspect.”
Dewar continued: “It is reasonable that government explore the idea properly. Overall we worry that there may be political pressure brought to the process that ignores or significantly downplays the risks to society of a CBDC.”
The “digital” aspect to money is also brought into question. The UK is increasingly a digital cash-based society: less than 15% of payments are made with physical cash according to the Bank of England, and as many as 23 million people–about a third of the UK population–did not use cash at all in 2021.
Scott asks of the treasury, “Don't we already have a digital pound?”
“From an end consumer perspective, the pound is mostly digital these days regardless of the mechanism used.So once they have finished their exploratory stages, I would love to see a list of the benefits and new features a CBDC will be bring to the public.”
In the meantime, Scott will “continue to focus on Bitcoin and making a global interoperable system everyone can participate in.”
Related: Amid crypto winter, central banks rethink in-house digital currencies
Dewar shared that there could be hope for Bitcoin and the UK government: “the role description notes that the emergence of private sector money (such as Bitcoin) offers exciting opportunities for UK businesses and consumers, and we would very much agree with that at Bridge2Bitcoin.” The Bank of England CBDC, by design, will be available to Brits although no official timeline is set.