Britcoin would struggle to secure mass adoption , experts warn BoE

UK, experts told City A.M., after the Bank of England said a central bank digital currency (CBDC) is “likely to be needed” in the future. To counter the risk of too many UK consumers putting their money in digital currencies and putting a squeeze on bank deposits, the Bank is likely to propose a temporary limit on digital pound holdings of between £10,000 and £20,000.

Quentin Vanderweyer, assistant professor of finance at Chicago Booth School of Business said central banks may deliberately make CBDCs “unattractive” to as “it’s no effort to push a button on your smartphone to transfer money.”

However, Keith Bear, fellow at the Cambridge Centre for Alternative Finance, said the biggest challenge for the countries which have trialled the use of CBDCs, is in securing adoption.

“The problem is really going to be about adoption and having sufficient adoption to make the whole thing worthwhile, rather than having too much adoption,” Bear said. Privacy is another flashpoint for central banks. While the Bank has stressed that the accounts would be anonymous, officials have suggested the digital pound could be programmed to buy some products and not others.

In 2021, deputy governor of the Bank of England Jon Cunliffe said: “You could think of giving your children pocket money, but programming the money so that it couldn’t be used for sweets.”

This has sparked fears it could be used to spy on consumer spending, with a House of

Lords committee concluding a CBDC could be an instrument for “state surveillance”. These concerns are shared by the crypto industry, and, as CMS’s Charles Kerrigan noted: “It’s not every day that the Lords and the crypto industry see things from the same hilltop.”

Bradley Rice, a partner in financial regulation at Ashurst, said "the privacy concerns are important" but doubted whether the government will spy on consumers.