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Will the New Digital Pound, or Central Bank Digital Currency (CBDC) be Achieve or Failure for Citizens? – Blockchain News, Opinion, TV and Jobs

The Department of Finance and the Bank of England are consulting on the potential digital pound, or central bank digital currency (CBDC). This consultation was launched because both HM Treasury and the Bank want to ensure that in the future, people have access to ‘safe money’ that is comfortable to use. People’s daily lives are becoming more digital, and new digital coins can also support private sector innovation.

The digital pound will be issued by the Bank of England and can be used by households and businesses for everyday in-store and online payments and can be exchanged for cash and bank deposits, complementing cash.

At the moment no decision has been made to introduce a digital pound, but the Bank of England will now as they say, ‘continue further research and development work’. The public is invited to provide their views on the scheme to be adopted.

Consultations are open for comments until June 7, 2023. After that the coin will reach a ‘design phase’ which will see technology and policy requirements so development can be accelerated if it is decided to build on it.

According to a press release on Bank Of England website the digital pound will replicate the role of cash in the digital world, meaning that a £10 digital pound will always be worth the same as £10 cash.

As the coins will be issued by the Bank of England itself, they will be subject to privacy and data protection and according to the Bank of England neither the Government nor the Bank will have access to personal data. Holders will also experience the same level of privacy as bank accounts. The digital pound will be accessed via a digital wallet offered to consumers by the private sector via smartphone or smart card, and will be intended for online and in-store payments, rather than savings, with no interest being paid on holdings. If currency is indeed to be issued, there will be an initial limit on how much an individual or business can own.

According to the Bank of England, the needs of vulnerable people were being considered in the digital pound design process to ensure that it would be simple and easy to use and understood and trusted by the public as a form of money.

Unlike cryptoassets and stablecoins, the digital pound will be issued by Banks and not the private sector. This means that it will have intrinsic value and not be volatile, unlike crypto assets (without reserves) as there will be a central authority to back it up.

But why do we really need digital pounds when payments are already largely digital?

The most obvious and immediate benefit of CBDCs, in the form of a ‘core ledger’ which is a robust and secure technology platform, is a payment system that is faster, cheaper and more efficient, both at home and abroad. This will reduce the cost of creating, distributing, and securing physical money. These advantages can provide greater productivity in the economy, which is a fundamental aspect of economic development.

But will such an implementation be only positive? What exactly are the drawbacks of such a coin?

The tipping point is that a CBDC can become a mechanism for all kinds of central (government) control, which anyone who grew up in the free world might find hard to imagine. The problem with cashless digital currency is, you can’t withdraw your digital tokens and keep them under the mattress, and in the end there may be no option for physical cash in a country at all. This would give the central bank greater flexibility to apply negative interest rates, and in doing so, people would then be encouraged to use money or lose money, increasing consumer spending.

The Chinese Communist Party is currently developing a Central Bank Digital Currency that will allow the government to oversee, and control the behavior of its citizens as part of a larger system of social credit.

Under China’s nascent social credit system, citizens are given credit scores based on their online and offline behavior. It rewards ‘good’ behavior such as spending time with a disabled or elderly person and punishes ‘bad’ behavior such as protesting against the government or spending too much time playing videogames.

But when the ‘trust’ is violated, restrictions are placed, meaning citizens who commit even minor non-compliance can be blacklisted for traveling, going to restaurants, watching movies, buying insurance, or even renting, or buying a place to live. . No, it’s not episode of the Netflix series Black Mirrorbut this appears to have happened to more than 30 million citizens, according to China’s state-run media.

With the new big data-powered Digital Currency and Electronic Payments Central Bank system, the Chinese Communist Party can have one more tool to monitor and control citizens’ behavior.

Alex Mann, Partner at ConcentricThe pan-European VC, who heads bitcoin-focused corporate fund Timechain, shared a critical view on the subject of the UK’s CBDC, commenting:

“CBDC is an affront to the proud tradition of individual liberties enshrined in the British constitution since the Magna Carta. The pound is already digital and thus the only goal of the CBDC is to improve population control and surveillance. CBDCs, due to their programmatic nature are bound to be coupled with ‘social credit scores’, the CCP style, to ‘encourage’ behavior deemed desirable by the current political regime. When money is limited in how and what can be spent, it ceases to be money and is more akin to coupons.

In stark contrast to CBDC is the only decentralized, fair and open monetary protocol in the world – Bitcoin. If the UK government is serious about innovating to get out of its current and inevitable debt-ridden mess, it must embrace innovation once again and embrace bitcoin. Bitcoin is an open and digital monetary protocol whose architecture is inherently more performant, adaptable, and capable than any CBDC – by definition. Due to its open source and permissionless nature, the private sector is free to innovate – just like the internet. In fact, it is instructive to think of Bitcoin as an internet of value, a means of communicating value securely and at the speed of light just as the internet allows us to communicate information at the speed of light.

Bitcoins are inevitable. It will be and has been adopted by free people all over the planet. Countries that adopt it will be at the forefront of prosperity in the 21st century, while those that seek to limit and limit their populations through CBDCs will fade into nothingness and despair. BTC, not CBDC.”

The Governor of the Bank of England, Andrew Bailey, said:

“As the world around us and the way we pay for things becomes more digital, the case for the digital pound’s future continues to grow. The digital pound will provide new ways to pay, help businesses, maintain confidence in money and better protect financial stability.“However, there are a number of implications that our technical work needs to consider carefully. This consultation and the further work that will now be carried out by the World Bank will form the basis for in-depth decisions for countries about how we spend our money.”
Either way, the digital pound isn’t going to happen overnight. The government is not going to push a button and instantly introduce programmable and personalized monetary policy. It may take five years. The decision on whether to implement a digital pound will probably be taken around the middle of the decade and will be largely based on future developments in money and payments. The earliest stage in which the digital pound can be launched is the second half of the decade.

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