99% of my money has been digital for years now. Why does it need to be centralised?

This is as I understand it digital "cash" separate from your decentralised ViSA/MasterCard digital spending and your digital banking with the high street (not that they seem to physically on the high street anymore) banks.

I can just imagine the look of glee on Mad Vlad Putin's face as he imagines how much he could disrupt UK society if it were switched over completely to "Digital Cash" ...

The nice thing about real, actual hard cash is, it's resilient to things like power outages, exploding undersea internet/power cables, cyberattacks, etc. The UK infrastructure is already creaking, without any/much enemy action at all. It may fall over on its own without anyone pushing it. Therefore we should expect severe outages. But instead we seem to be piling more and more "digital" / "smart" infrastructure on top of the creaking old physical infrastructure, with little maintenance never mind expansion of the latter.

The other nice thing about real cash is: It's also private and frictionless - There's a lot of people who, if they were worried that they might have to explain to HMRC about that gold watch they wanted to sell, just wouldn't bother. But maybe they were a criminal who had just nicked the gold watch, so getting rid of hard cash would stop them and that's all good then ? Yeah, right. Of course the real criminals will always find other means of doing their dodgy business, and it's just the honest rest of us who will have to suffer.

But I expect that cracking down on privacy is the real objective here, whatever damage it may do. This government is utterly in bed with technocrats who want to make a killing at the expense of everyone else, and they don't really seem to give a hoot about the long-term future prosperity / survival of the country.

As Scotty said: "the more complex the plumbing the easier it is to block up the drain".

Just look at the crisis that happens when ONE UK bank goes wonky for a day or two. People basically can't function.

I have ZERO faith in anything created or managed by the government. This is just going to speed up the creation of a parallel economy and move more transactions out of sight.

Put another $ in the 'Alex Jones was right' jar.

I'm not sure what The One Show has to do with this.

Wrong side of the pond :)

There's a big difference between using cash, and using a Visa / Master / Maestro / Amex debit or credit card. The former is largely anonymous (notes do have serial numbers) and free-to-use for all, whereas to use the latter you have to have a bank account, be credit worthy, etc. A £10 note is always a £10 note, but a Visa card is only good so long as Visa says it is.

So the real question is, should government provide the kind of convenient functionality one gets from a Visa, but with the usage properties of paper cash?

It's a tough question: so many of us use commercial solutions for our "money" purposes that a state-owned alternative struggles to be justified; it could be cheaper to just give everyone who can't afford to use a commercial card enough money so that they then can .

The "centralised" argument is about how to administer the ledger. BitCoin is a terrible way to run a ledger, having none of the properties one gets from an exchange of paper money. Ethereum has got a bit better, at least taking the vast amount of energy required out of an exchange, but otherwise suffers all the same problems as any other public ledger. Centralising it in the way that a bank does solves most of those problems, it's then a matter of how far does one go to make it "anonymous". Being able to track money through digital exchange is probably quite a useful crime fighting tool, which is partly why dodgy deals involve suitcases of used notes to hide the exchange from the Police / authorities. Does a government continue enable such anonymous exchanges, or does it take the opportunity to be able to see all of the exchanges if, for example, a warrant is granted?

You know they're going to take the opportunity to be able to see all of the exchanges regardless of whether a warrant is granted or not.

Yes, "they" will be able to see that I shop at a given supermarket, but "they" won't know what I've bought. The shopping list is not sent to the VISA card handler, only the amount paid.

Which is basically no different from "they" being able to see that I connected to The Register, or that my smartphone is connected to a given cell.

We live connected lives and we have only ourselves to blame for that. Stop referring to some shadowy "they" as an excuse for protecting your privacy. Give some real problems.

AIUI, that's why the Big Stores have "loyalty card" schemes like Nectar. Then they do get to see exactly what you've bought. They'll please you by sending targeted discount vouchers, but mostly it's for their benefit. Nectar particularly interesting as it is a system shared by several Big Stores.

Good question.

Since COVID I have touched physical money maybe three times. Everything else has been done via VISA or bank transfer.

The digital Euro already exists, so does the digital pound. There is no need to pontificate about a new currency, just create a plastic card with proper security and contactless tech, call it a wallet and let everyone put their money on it like cash at the distributor.

Maybe limit it to €200 max, to avoid the bigger issues.

Get terminals in the hands of stores everywhere, or allow the existing card terminals to deal with the wallet, and you're done.

Such prepay owned-by-the-bearer cards already exist.

They're called "gift cards".

The only plausible existing problem or slight annoyance that a "digital pound" could solve is that it's difficult for some people to get a bank account due to ID requirements - eg if you're homeless.

Except that could be far better solved by requiring high street banks to permit people to open "basic" bank accounts that have debit cards and cannot go into debt.

Hang on, they already did that.

It gets even more interesting - realistically a bank these days is the trusted (ahem) 3rd party that holds a record of how much money you have.

If there's a centralised britcoin what's the point of the bank ?

Because it makes it easier to switch to a multi currency system which has clear economic advantages and has been something the central banks have been salivating over for years.

For example:

The BoE issues currency A and currency B.

You can only get paid in A and store A in your bank account but it can't be used to purchase things.

You can't get paid in currency B or store it in your bank but you can use it to purchase things.

The BoE controls the exchange rate between the two currencies, when you go to buy something the exchange is done using the current rate.

So with this system when the BoE wants people to reduce spending instead of using crude systems like adjusting interest rates, they can directly change the exchange rate between the two currencies and lower how much B you get for your A, and vice versa when they want to increase spending..

"they can directly change the exchange rate between the two currencies"

That will make the forex traders unhappy. The whole money making ponzi scheme relies on volatility between commodities. £ vs $ drops 2c and the FTSE100 hits a record high.

> something the central banks have been salivating over for years.

Got any refs to reading material around this? It's not a system I've seen suggested, so would be good to get up to speed on the thinking.

Control. CBDCs can do all sorts of things that make certain people excited. Tokens can be set with an inbuilt expiry date, they can be coded to only be exchanged for certain items and they inherently record their precise progress through wallets. All of this control can potentially be turned on or off entirely in secret and only discovered by end users when they try to break a particular rule that's imposed upon their tokens. Among a great many other models, it finally makes Gesell economics possible without the implementation issues associated with standard currency.

Imagine if welfare payments or even private salaries were paid in a form where a certain portion could only be spent on food/housing/energy and another percentage (potentially zero) were permitted to be saved or spent on discretionary items. Imagine a group of political undesirables being identified and being able to instantly turn off their ability to accept funds or purchase travel tickets (or even fuel/EV recharging); as well as identify and question everyone with any financial association with them. The total control offered by CBDCs allows this and prevents the usual workarounds associated with systems like EBT; there's no longer a great interest in bartering (buying items with welfare and selling them at a reduced price for currency) when everyone has tokens they can only spend on the same barterable goods and algorithms can identify any crooked dealings by merchants (for example, an automatic flag if a merchant accepts a lot of payments for 'food items' without the corresponding prior purchases from suppliers) and individuals (picking up that a welfare recipient paid x for an item then was paid x/y by someone not tagged as a merchant).

Essentially, through all the extra levers that can be pulled, the issuer of CBDCs gains control, in time, over all private property, individuals and commerce without the messy business of physically seizing anything.

To a certain point: as soon as bartering is better than using money, the CBDCs start to lose control again. Worse, they lose visibility of transactions, making taxation very difficult.

I can't think of a way to stop people swapping goods as an alternative to using money. Or to stop unofficial alternative currencies or systems (e.g. swapping a certain number of hours' work for goods) taking over from using money.

Same reason we're all "encouraged" to get smart meters: control. A centralised, digital currency can be locked and blocked, and restricted in where it can be spent, or how much, or by whom. Like a credit card, but with greater granularity, and now the state is cutting out the middle man and taking all the control (and profit) for itself.

The one saving grace of this mad world we inhabit, is that our rulers are so incompetent with any sort it technology that it's unlikely to be implemented in a working state, and may never be finished at all.

Watch the programme called '97%' on Netflix - a real eye-opener.

Most money is 'created' by commercial banks, not the Bank of England.

I suspect they just want in on the gig!

Isn't that just basic economics & monetary theory? Nothing extraordinary, just how banks work?

Exactly my thoughts as well.

I simply cannot see that having a digital currency make any difference what so ever in how we operate.

It is not going to change how anything works.

Is that it might retroactively allow the public to track and trace what, who and when the government is spending VAT and TAX on. And that is not cricket, people being able to monitor their elected officials and other government institutions.

Ah, just because the cost of running the blockchain is farmed out to everyone (want to use Britcoin? Run a miner on your electric bill! Proof of Stake!) doesn't mean you get to read it - govt spending kept under a different encryption key.

Until that gets leaked, of course.

> the way we pay for things becomes more digitalised

From the tap-to-pay token in my pocket through to the PDF monthly statements, how much more digital can it get?

> the potential for large and rapid outflows from banking deposits into digital pounds

> including the need for a central ledger to store user balances.

Ah ha - this is really just an attempt to create one single place to hold (ultimately) everyone's basic "chequing account", taking them all away from the high-street banks. That can't possibly have any down-sides.

Transaction fees, including conversions to and from BritCoin (you know it'll end up being called that, or worse - Coiny McCoinface!)? No risk of creating an effective split in who uses which (if bonk-to-pay works equally well for the customer, why would customers want to pay to convert?) so traders have to provide both services and absorb those fees as well, making for an expensive and confusing transition period.

Sorry, what was the point of this again?

> UK can't dismiss CBDCs, because its trading partners and allies are already working on their own equivalents

Well, we already pay conversion fees for cross-currency trading, so what does it matter to anyone if we're spending Sterling to buy Rupees or ERupees? We just get whichever our trading partner wants and take the conversion fees into account when deciding if the trade is effective.

How about if the two Ecurrencies were mutually convertable without any fees, that would help. They could peg them together as well, get rid of all those arbitrage costs and uncertainties as well.

One World Currency?

Ok, should have checked properly, Coiny McCoinface is old news.

Great news! Now all they need to do is to appoint a lead cyber-expert chum like, erm .., Dido Harding, to oversee it and everything will be fine, promise.

Ultimately a digital currency will need a "credit stick", a physical device that holds a balance.

It might be an app on your smartphone, or it might be a seperate physical device.

Cash is "worth" it's face value - eg a £5 note

If that cash is used 100 times in exchange for goods and services it is still worth £5.

If I use current "digital" technologies the "money companies" take a slice at each transaction - eg 1.5% - so after only 67 transactions the cash has earned more for the "money companies" than the face value of the cash. That is why they love digital transactions so much and quietly made lots of money off the back of Covid and the reduction in physical cash spending.

If this new digital currency came in, would there be a transaction charge to a provider at the point of purchase (stupid question!) and who would this fee go to as the blockchain presumably run by the Government would become involved ...? Would there be transaction fees and government blockchain fees? Is it potentially another hidden tax on spending?

Can we hear the bankers wringing their hands in glee?