Forum Topic

CBDC consultation

Have until June to give our views on the possible introduction of CBDC. https://www.bankofengland.co.uk/paper/2023/the-digital-pound-consultation-paper

Paul Beer ● 1092d14 Comments

If you don't understand digital currencies take care :-)https://www.unilad.com/technology/bitcoin-user-plea-15-million-wrong-wallet-455047-20230511

Michael Ixer ● 1082d

£20,000 is the yearly ISA new money investment limit.

Philippa Bond ● 1083d

A Question of Purpose and Trust - a speech by Carolyn Wilkins, External member of the Financial Policy Committee at the Bank of England, 10th May '23. Comments on CBDCs:https://www.bankofengland.co.uk/speech/2023/may/carolyn-wilkins-keynote-speech-at-omfif

Michael Ixer ● 1083d

Yes, Jo, my slip-up, it was a re-post by my ex-colleague :-) Yes, CBDCs are different from Bitcoin in terms of how they are categorised in terms of asset class, risk, regulation, etc although they may use similar underlying technology such as a blockchain or, if one wants to be technical, distributed ledger technology.

Michael Ixer ● 1087d

That's a good explanation. I take it your ex-colleague re-posted Michael Saylor's tweet, rather than Michael Saylor is your ex colleague :-)Also, as you say it is off tangent slightly because Bitcoin is fundamentally different from CBDCs, not least because it is not owned by/issued by any government

Jo Amadi ● 1087d

Slightly off at a tangent but an ex-colleague posted this explanation of Bitcoin from Twitter on LinkedIn. I wouldn't necessarily endorse all it says but it is a simple, basic, fun explanation :-)https://twitter.com/saylor/status/1654577850857529346?s=20

Michael Ixer ● 1088d

Paul, have you considered moving to Florida? The state legislature have just voted to outlaw CBDCs. Downside is the hurricanes are likely to get worse as global warming increases and it appears they fire teachers because parents can't tell the difference between art and pornography ...https://blockworks.co/news/florida-approves-cbdc-ban

Michael Ixer ● 1089d

Jo, Like all government consultation documents they can be tricky to understand. I believe the implications could have big changes for us all, it far bigger than just an expansion of today’s digital currency system. I believe the aims are to control 100% of the economy including how and where you spend your money. A step further….Digital cash could be programmed to ensure it’s only spent on essentials or goods that employer or government deems to be sensible.important to fill this consultation document as government hopes it will just pass us by. P

Paul Beer ● 1089d

Plus a view on digital currencies from the Banque du France. I guess if the might be a CBDC Euro then they'll be a CBDC Pound!https://www.banque-france.fr/en/intervention/raid-digital-perils-and-potential-digital-currencies

Michael Ixer ● 1090d

I wonder how much this consultation is an effort by the BoE just to keep up with the world of digital currencies and not become an "also ran, bit player"? Although CBDCs are obviously excluded from this as they're essentially equivalent to fiat currencies so not categorised as assets in this context, the EU has now produced it's MiCA Regulation proposal (Markets in Crypto-Assets) which, given the potential size of the EU market, means it might lead the world in setting crypto-asset standards, as some consider the GDPR is doing with data protection and privacy. The UK does have proposals regarding crypto-asset regulation but I think post Brexit the UK markets are probably considered too inconsequential to have global influence in this area, and the US regulations in this area seem immature given the FTX debacle.  https://paddihansen.substack.com/p/the-eus-mica-framework
Anyway perhaps if you don't like it or fully understand, stay clear of it? The BoE proposal certainly seem to indicate its CBDC will be optional so don't get involved! But I guess, like it or not, now they're here, crypto assets and currencies will be staying!

Michael Ixer ● 1090d

I've not had a chance to study the consultation report in detail but use of the CBDC appears to be optional. So, as Sean says, I don't see that it need make any difference if we don't want it to: we just keep using bank accounts, online transfers and debit or credit cards as at present. Those transactions are all traceable anyway (and can be restricted by banks if they want) for AML and other legal purposes.

The £20,000 limit proposed is interesting but if one has more than that in cash it'll likely be held in a bank savings account rather than a CBDC wallet that pays no interest? Something like smart contracts might be useful but they won't be implemented by the BoE directly, it's proposed they could be a function provided by the payment interface provider; however, if they wanted to, I don't see why banks couldn't provide these as a function of existing accounts? I suspect people desperate to have them are using the Ethereum digital currency already?

I suppose CBDC will come eventually but I wonder how much they're really needed or will be used, certainly in the short term

Michael Ixer ● 1092d

"I don't think CBDC will make any significant difference to the consumer "Hopefully, it will be useful to HMRC.

David Ainsworth ● 1092d

Money is already 90% digital so this is a minor step. Everything I earn remains invisible to me even after it's spent, just numbers on a screen. 
We already have problems with banks deciding to withdraw banking services from people and closing their accounts. All your bills have gone digital. I don't think CBDC will make any significant difference to the consumer 

Sean Hodges ● 1092d

Thanks for posting this Paul. I was not aware of the deadline.Applying a critical thinking approach to this, I notice how the government is positioning CBDCs as 'it makes sense to go digital' as the headline but buries the increased controls it could give them within the detail and only mentions the perceived 'benefits' eg being programmable could help you limit the amount you spend on gambling. Woo!Neglects to mention that it could also be programmable by the issuer (the government) to limit your access to your own money if you want to spend it on things that don't fit with their agenda e.g. can't spend it on a flight, can't buy meat etc if it doesn't fit with their net zero agendaCBDCs are coming anyway, regardless of any opinions expressed in response to a consultation. I hope a lot more people dig into the implications of this so everyone is prepared.

Jo Amadi ● 1092d