May 29, 2023

News Stories from the Digital World

Bank of England urged to involve private sector in new digital pound

The Bank of England and the Treasury are “inevitably” set to launch a digital pound and it is “critical” that they involve the private sector, warns the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The warning from deVere Group’s Nigel Green comes as he contributes to the consultation about the introduction of a UK state digital currency – being carried out jointly by HM Treasury and the Bank of England – which “seeks to open that conversation and seeks to begin to build that foundation of public trust”.

The consultation says: “Any future digital pound would be a major piece of national infrastructure which would likely take several years to complete.

“Its launch would require deep public trust in this new form of money… The journey towards issuing any digital pound therefore necessarily involves an open, national conversation about the future of our money, in parallel with detailed technical consideration by experts across the UK public authorities, and informed by evolving market trends.”

The deVere CEO notes: “Given the high level of research and development, and the backing from the Prime Minister, who has given it the media-friendly tag the ‘Britcoin’, and due to tech increasingly being at the core of how we live, work and do business, we fully expect that the Bank of England and the Treasury will inevitably launch a state-backed digital pound.

“Whilst we have raised serious concerns both in public and in the Bank and Treasury’s consultation, about important security and privacy issues, there’s no doubt in my mind that a digital pound will happen -and sooner than many might expect – as digital is the future of money.

“We believe that they’ll announce their decision to do so by 2025.”

A digital pound is, agrees Nigel Green, likely to have many advantages, including convenience, efficiency and transparency, but potentially what it could not offer the user is privacy.

As part of the official consultation, he noted that it is “important to point out that a state-backed, programmable digital currency will provide the government with greater oversight of citizens’ transactions in real-time.

“It is going to be a game-changer in the UK’s financial system as it will be able to track and trace every purchase and monitor every penny of the money that’s being spent.

“The authorities have no business telling citizens how or what to invest in, if what they’re planning to buy or invest in is perfectly legal – and this is leverage they would have with a digital pound.

“This kind of control over people’s private, personal, financial decision-making goes against the values of Britain’s proud financial heritage. A digital pound is likely to become an infringement on our privacy, rights, and ability to control our own money.”

However, the deVere CEO concedes a UK state-backed currency is on its way and a way to mitigate potential issues and foster opportunity would be to involve the private sector.

He observes: “Private sector digital wallet providers should play an important role in providing the necessary infrastructure to support these services, as they are already years ahead in terms of infrastructure, technology, and in terms of user experience compared to the Bank and Treasury.

“Digital wallets are designed to be user-friendly and accessible, making them a convenient option for individuals and businesses to use central bank digital currencies. This will help increase adoption and usage of a digital pound, which will be critical for their success.

“By partnering with private sector digital wallet providers, the Bank can leverage their innovation and ability to quickly adapt to changing technologies and user needs.”

In addition, competition among digital wallet providers will be able to help drive innovation and improve services for users, leading to a better user experience and lower costs, he says.

Nigel Green concludes: “Despite some reservations, a digital pound is on its way, we believe, and we therefore urge the Bank and the Treasury to capitalise on the expertise and experience of the private sector to ensure its ultimate success.”