"Trust Us On CBDCs", Says Bank Of England
While the BoE seeks to reassure citizens that a CBDC won't compromise their privacy, the evidence from elsewhere tells a different story.
In a speech titled New Prospects For Money, given at the Financial and Professional Services Dinner, Bank of England governor Andrew Bailey sought to clarify some of the functionality that a UK CBDC—or "Britcoin"—might offer.
As it explores the case for a CBDC and researches the technology, the Bank of England has led a joint consultation with the Treasury, which has attracted over 50,000 responses from members of the public.
CBDCs have proven controversial. Unsurprisingly, many of these responses concerned the implications for citizens' privacy.
"Some of the responses indicate that retail CBDC can be a real breakthrough in the world of digitalisation. Others suggest concern about a desire by the authorities to reach into people’s privacy which is absolutely at odds with what we should do, and indeed would. Incidentally, whoever painted 'no to CBDC' on a motorway bridge, I can only apologise to the Cumbria Biodiversity Data Centre. Sorry."
In essence, the BoE is simply asking the public to trust it, stating that it has no plans to use a CBDC for surveillance or financial control.
Is this credible?
The Pitch Vs The Reality
Bailey's reassurance unfortunately does not chime with other statements from central banks, or the apparent reality of CBDC's under current development.
Agustín Carstens, the General Manager of the Bank for International Settlements (BIS)—the central bank for central banks—has been quite open about what he calls the benefits of CBDCs. In his view, the administrators of the system should have absolute oversight and control of transactions, fundamentally changing the nature of money.
The concerns expressed by members of the public are also supported by an analysis of the source code for Brazil's prototype central bank digital currency (CBDC). Blockchain developer Pedro Magalhães claims to have discovered functions in the code that could allow a central authority to freeze funds or remove money from accounts, with no clarity or consultation about who has the authority to execute them.
None of this will come as a surprise to CBDC critics, and neither will it reassure UK citizens that the BoE's digital pound will be any different.
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