A former Bank of England economist says there is “no customer demand” for the digital pound, calling it a costly project with unclear benefits.
Ex-Bank of England economist appears to be highly critical of the digital pound initiative, saying it is a “costly, useless project” with “no customer demand.” Neil Record, writing in an op-ed for The Telegraph, argued that the push for a digital currency is more about protecting the central bank’s financial model than addressing any real public need.
Record says “none of the reasons quoted [by the Bank of England] seems to me to be compelling enough to set up a major financial project,” suggesting that the real motivation is the BoE’s concern about the fall in cash use, which impacts its income. He also notes that the “interest foregone by holders of notes and coins is the Bank of England’s principal source of income.”
“A world where cash becomes rarely used, and not widely held, would fundamentally damage the Bank of England’s economic model, and hence its existence in its current (independent) form.”
Neil Record
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Record also points out that many British consumers already have access to secure digital payment systems through banks and mobile platforms, while a government-backed digital currency, offering no interest and designed for everyday transactions, would struggle to compete with existing services.
“So a Central Bank offering that looks to the customer very like a current bank current account would struggle to be appealing. U.K. current accounts can, and often do today, offer interest on balances.”
Neil Record
Record also raised concerns about privacy issues as many consumers would likely distrust the BoE’s involvement in their financial affairs. Despite spending £24 million (over $30 million) so far, Record believes the digital pound lacks customer appeal and urges the Bank of England to focus on its core responsibilities, like inflation control.
The Bank of England and HM Treasury first announced plans to explore the creation of a digital pound in 2021. Since then, the project has advanced with consultations and discussions, though no final decision has been made yet.
Read more: U.K. Central Bank opens Digital Pound Labs for CBDC test
