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CBDC Concerns Ignored as BoE Advances Digital Pound Plans

DailyCoinDailyCoin2024/08/24 07:36
By:DailyCoin
  • The Bank of England revealed what’s next for the digital pound.
  • CBDCs are associated with control, surveillance, and authoritarianism. 
  • No CBDC project has offered tangible benefits above existing payment methods.

The global landscape of central bank digital currencies (CBDCs) is rapidly gaining momentum, with 66 countries currently piloting or developing projects, according to the Atlantic Council. Despite widespread public concerns and notably low adoption rates in various pilot programs, the surge in CBDC initiatives continues unabated.

Against this backdrop, the Bank of England (BoE) recently updated the digital pound, outlining the project’s next steps.

BoE Ready to Advance Digital Pound

In an update on its CBDC project, the BoE announced it is moving forward with the digital pound by entering the design phase. This stage will involve assessing the technological and policy requirements to bring the CBDC to life. The BoE estimated that the evaluation process could take up to three years to complete.

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During the design phase, the central bank plans to conduct real-world testing of the digital pound to gain insights into how the CBDC would function in everyday scenarios. The findings from this will determine whether the BoE advances to the project’s build phase.

The BoE emphasized that implementing a digital pound has yet to be decided. Before any potential rollout, the project would require Parliamentary approval and undergo another round of public consultation. 

According to the central bank, the earliest possible launch would be in the ‘second half of this decade.’

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The BoE included a QA section in its update to address common concerns. The central bank assured that neither it nor the government would be able to surveil transactions. It stated that user privacy would also be safeguarded by existing data protection laws. 

Additionally, the BoE stressed that there would be no mechanism for the central bank or government to program or restrict digital pounds, aiming to allay fears about potential financial control.

CBDCs are Failures

Despite ongoing concerns about CBDCs, advocates maintain that they offer benefits such as financial inclusion, reduced payment friction, and digital modernization. Citing The World Bank, The World Economic Forum also claimed that CBDCs can reduce poverty, create jobs, improve gender equality, and raise health standards.  

Yet the general public consensus remains skeptical. A recent CFA Institute poll revealed that 58% of respondents either disagreed with or outright opposed the idea of central banks launching CBDCs.

Kevin Dowd, an economics professor at Durham University, conducted a study of CBDC projects across seven jurisdictions, including China, Nigeria, and Ecuador. His research concluded that these initiatives did not deliver tangible benefits beyond existing payment solutions and, in his view, were failures as they did not enhance the lives of citizens.

The reluctance to adopt CBDC technology is particularly evident in Nigeria, which Dowd cites as a notable example. Despite a population of 220 million, the country’s e-Naira network has only 80 active merchant wallets, indicating extremely low uptake and usage.

Based on his research, Dowd characterized the CBDCs he studied as “abandoned experiments” and “embarrassing flops” while panning the hubris of those who promote them.

On the Flipside

  • U.K. citizens have been imprisoned for sharing and responding to posts related to recent illegal immigration protests.
  • The BoE sought to differentiate the digital pound from Bitcoin by highlighting that cryptos are volatile and issued by private companies.
  • The newly elected Labour Party has not given a policy statement on cryptocurrencies.

Why This Matters

Despite ongoing public concerns and past failures with CBDCs, it’s hard to believe that the BoE and other central banks continue to push forward with them.

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Is Historic CBDC Bill the End of the Line for Digital Dollar?

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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