LETTERS TO THE EDITOR

Designing a decent Britcoin

[Re: Digital pound needed to ‘anchor’ monetary system as Bank likely to set £20,000 limit on holdings: John Cunliffe, Feb 7]

Last week the Treasury and the Bank of England formally began a consultation for a state-backed digital pound, which could be launched as soon as 2025. This is encouraging progress - after all, CBDCs provide a practical alternative to the decreasing use of cash on a global level, and it can only be a good thing for society if everyone has direct access to central bank money.

As the Treasury’s plans accelerate however, it’s crucial to realise that the design of a CBDC is the key to bringing this broad concept to life and to succeed as a new form of money.

CBDCs come in hundreds of different shapes, sizes and flavours, and the flavour each central bank chooses will ultimately determine whether a CBDC will work for the people, or not.

At the time of writing, more than 90 central banks are looking to introduce a CBDC, but the slow adoption of such digital currencies in the Bahamas and Nigeria one year on suggests that the use case is unclear. Central banks have to work harder to understand consumers’ and merchants’ needs. It is also the motivations behind the design and adoption of CBDCs that need to be clarified for the public. We must focus on championing the responsible and proper design of CBDCs to alleviate the fears associated with the unknown, and ensure the Bank of England creates a CBDC experience that the public wants to adopt as part of their everyday lives.

Carlos Leon