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I keep seeing this and not understanding the point of it. Does anyone have insight? I already have a digital pound in my bank account.

by dom96 4y ago

eptcyka 4y ago
This way, the banks still need to exist for every day accounts. Otherwise, they'd only be able to do lending.
iamben 4y ago
Right? "At the other end, you could say I need a little wallet full of internet cash to buy things on Amazon" It's already almost frictionless shopping on Amazon with my existing bank/pound?
ZiiS 4y ago
Sounds like it is attempting to cut Visa/Mastercard out of paying for things online (i.e. Amazon) rather then being a traditional crypto.
- deleted 4y ago
  [deleted]
OJFord 4y ago
HMRC would love it I'm sure. I'm not sure there's any benefit to 'users', nor why (non-central) banks would care either really, beyond having a new thing to race to be an early provider of and grow marketshare (some would like that, especially more modern/fintechy ones, and others hate it I suppose).
rwmj 4y ago
It seems to be a solution in search of a problem, and probably also relates to the then Chancellor now PM announcing last year that he wanted to make the UK "a global hub for cryptoasset technology and investment"[1]. Since crypto is now generally regarded as a scam by the wider public, that has been quietly forgotten, but apparently the BoE didn't get the memo yet. The latest thing is they want to use the digital currency to "bank the unbanked", ignoring that basic bank accounts already exist, and banks are required to provide them[2]. [1] https://www.gov.uk/government/news/government-sets-out-plan-to-make-uk-a-global-cryptoasset-technology-hub https://www.gov.uk/government/news/government-sets-out-plan-... [2] https://www.gov.uk/government/collections/basic-bank-accounts https://www.gov.uk/government/collections/basic-bank-account...
- azangru 4y ago
  > It seems to be a solution in search of a problem Maybe the next step will be to create one? :-)
  - AzzieElbab 4y ago
    It aims to combat strategic shortages of the # signs
- krona 4y ago
  > and banks are required to provide them Do you know if any of the political dissidents in the UK who have had their accounts shut down have successfully challenged a bank in court?
  - ben_w 4y ago
    > political dissidents Who? Do you mean like the IRA? Or do you mean like Sinn Féin, Plaid Cymru, and the SNP? I've not actually heard of any private individual in the UK getting un-banked. On the other hand, I do assume there's a need to prove one's identity and if that fails an account may be closed, and identity can be too expensive for some people. Not sure how to resolve that.
    - helsinkiandrew 4y ago
      Apart from a few Russian billionaires, about 25 people in the UK (£61K in total) have had their bank accounts "frozen" - it seems mostly Jihadist terrorists who have left the country to fight with ISIS: https://www.dailymail.co.uk/news/article-2994515/Only-25-British-terror-suspects-bank-accounts-frozen-despite-600-UK-jihadists-travelling-fight-ISIS-report-reveals.html https://www.dailymail.co.uk/news/article-2994515/Only-25-Bri... If you were found guilty and sentenced for money laundering, funding terrorism, or political corruption etc, I would guess many banks would not want you to have an account with them. There's a list of "sanctioned" people/organisation - who would probably find it hard to open a bank account in the UK: https://www.gov.uk/government/publications/the-uk-sanctions-list https://www.gov.uk/government/publications/the-uk-sanctions-...
Carstairs 4y ago
From what I can gather since your money is stored at the BOE rather than your high street bank it should help avoid another "too big to fail" type situation that happened in 2008.
ilammy 4y ago
How about removing ability of private banks and payment systems to unilaterally decide without a court order who you can or cannot transfer money to? How about giving that power to a random government official instead? And paving a way to non-fungible earmarked money while we’re at it.
neongreen 4y ago
It should be explained in this Bank of England working paper (part B and box C), but honestly even after reading through it I don’t quite get it. https://www.bankofengland.co.uk/-/media/boe/files/paper/2023/the-digital-pound-consultation-working-paper.pdf?la=en&hash=5CC053D3820DCE2F40656E772D9105FA10C654EC https://www.bankofengland.co.uk/-/media/boe/files/paper/2023... - Update 2: see nr’s comment below. - Update 1: my guess would be that private money (think Venmo) and crypto have a chance to win over commercial bank money (think bank accounts and transfers) for the general public, and the government thinks it’s a potential threat (probably wisely IMO). God knows why the bank industry doesn’t have its shit together, but even in the EU I’ve come to feel suspicious towards bank transfers. Maybe a transfer will take five seconds, maybe one day, maybe a week with no explanation why. Bank apps, even modern ones (N26 etc) are still somewhat meh. The part of my brain that thinks “ought” a lot is screaming “no, everyone ought to use bank transfers and they ought to be good”… but objectively they are a hit and miss. A CBDC is at least going to be stored in a single database, so maybe it’ll be working a bit better.
- nr378 4y ago
  > Update: my guess would be that private money (think Venmo) and crypto have a chance to win over commercial bank money (think bank accounts and transfers) for the general public, and the government thinks it’s a potential threat (probably wisely IMO). Venmo is really still commercial bank money - any deposit in a Venmo account is backed 100% by a deposit in a commercial bank account. > God knows why the bank industry doesn’t have its shit together, but even in the EU I’ve come to feel suspicious towards bank transfers. Maybe a transfer will take five seconds, maybe one day, maybe a week with no explanation why. Bank apps, even modern ones (N26 etc) are still somewhat meh. EU banks use a combination of SEPA and SEPA Instant, and for a payment to go via SEPA Instant both the sender and recipient have to be connected to the SEPA Instant scheme and settle via a common system (e.g. TIPS). Where this isn't the case, payments fall back to SEPA, causing a lack of predictability at time of payment. The status quo in the UK is much better, every bank is on Faster Payments (the UK equivalent of SEPA Instant), and have been for almost a decade. This makes bank-to-bank transfers in the UK fast and predictable. > A CBDC is at least going to be stored in a single database, so maybe it’ll be working a bit better. All UK bank transfers settle via the Bank of England's RTGS system, which means at heart, everything is already in a single database anyway.
wuiheerfoj 4y ago
In essence, bank accounts are somewhat pointless in the modern age. Banks are all required to provide the same service (more or less) and waste a shitton of money to make it happen and be regulated for it. Obviously getting rid of consumer bank accounts overnight would be a fiscal catastrophe, so they’re going to phase them out to ease the blow. That’s my 2c anyway
- mjburgess 4y ago
  This is a good way of putting it. Pounds in your bank aren't "digital currency" in this sense. They're privately provide bank IOUs. You still need cash to avoid using a bank. With digital pounds, you can "stuff cash under your mattress" and use it without a bank. Iirc, the central bank keeps an anonymous ledger that you have "digital access" to. You can use an intermediary, eg., a bank, to keep track of the transaction and prevent deannonymisation by the central bank. Though i think you can also completely avoid that too.
- nordsieck 4y ago
  > Obviously getting rid of consumer bank accounts overnight would be a fiscal catastrophe, so they’re going to phase them out to ease the blow. I don't know how the UK is run, but in the US, it wouldn't matter at all. Banks could easily replace all deposits with a loan from the Fed. The annoying part would be figuring out how ATMs get funded. I'd be fine with a few government ATMs (police stations, city hall, DMV, etc. would be obvious places) and the rest paid, though.
mytailorisrich 4y ago
No, the money we have in our bank accounts is not 'digital currency', it's a credit of 'normal' fiat currency. Central Bank Digital Currencies (CBDC) are more similar to cryptocurrencies.
redeyedtreefrog 4y ago
Economists would surely love the anonymised spending data, were it to be made available. Though it would have to be heavily aggregated to avoid any individuals being identifiable by their spending times and locations. Retailers would presumably save by not having to pay fees to Visa, MasterCard, Stripe, etc. For consumers, I assume that at first it will be used by early adopters just for the novelty value. Maybe eventually there will be some small monetary incentive to use it instead of visa. Conspiracy theorists will say that they're going to ban cash and force people to use it. Conspiracy theorists are wrong.
- heartbeats 4y ago
  > Economists would surely love the anonymised spending data, were it to be made available. They could get this from banks already. > Retailers would presumably save by not having to pay fees to Visa, MasterCard, Stripe, etc. These are already low in Europe due to regulation.
  - redeyedtreefrog 4y ago
    > They could get this from banks already. No they can't. > These are already low in Europe due to regulation. For sure, it's not going to save vast amounts of money. The original comment said "I already have a digital pound in my bank account". I am merely pointing out that though it may seem entirely frictionless and free to spend online already, there are costs involved.
    - heartbeats 4y ago
      > No they can't. What do you mean "can't"? My bank certainly has the information, since I can see it online if I log in. Of course they would have to change the law, but this also goes for the digital pound.
heywherelogingo 4y ago
An central point of easy, precise control and programmed permissions. The current banking system can sort of do some of that - they want it done properly. Pure control.
krona 4y ago
There are many advantages (to the government). One is this will CBDCs will effectively be a digital ID with a full financial transaction history. Secondly, it would prevent bank runs from happening. Thirdly, monetary sovereignty. This is a big one for the EU. It's all in the EU CBDC working paper https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2713~91ddff9e7c.en.pdf https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2713~91ddff9e...
- JumpCrisscross 4y ago
  > it would prevent bank runs from happening This is not true. > monetary sovereignty. This is a big one for the EU. This is only true to the degree Bitcoin is a threat to the euro or pound.
  - krona 4y ago
    > This is only true to the degree Bitcoin is a threat to the euro or pound. It's got nothing to do with Bitcoin and more to do with dedollarization. Read the working paper.
    - notahacker 4y ago
      The threat of dollarization of the UK economy is pretty minimal, and I'm not seeing how the present proposal to grant individuals optional rights to hold a relatively small sterling balance in a basic bank account administered by the BofE rather than some other entity changes that. The working paper seems more worried by the proposed Libra (remember that!) than the USD...
    - JumpCrisscross 4y ago
      > Read the working paper I did. It [1] referenced a paper [2] to claim "the rise of digital money could threaten monetary sovereignty," though it's more concerned with "digital currency issued by 'BigTech,'" for example Libra, than Bitcoin. The sovereignty argument is predicated on a threat of substitution. > more to do with dedollarization Your working paper doesn't mention dollarization as a threat to European monetary sovereignty. (The EU seeks to dedollarize its economy.) "Digital dollarization" has nothing to do with the dollar per se, but instead refers to the replacement of national currencies with non-national digital currencies. [1] https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2713~91ddff9e7c.en.pdf https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2713~91ddff9e... page 13 [2] https://www.nber.org/system/files/working_papers/w26300/w26300.pdf https://www.nber.org/system/files/working_papers/w26300/w263...
nr378 4y ago
This really just seems to boil down to a state-provided bank account rather than anything more meaningful, which is not necessarily a bad thing but is unnecessary given there is already a competitive market for bank accounts (all of which are covered by state guarantees such as FSCS protection or FDIC insurance).
justinzollars 4y ago
> I already have a digital pound in my bank account CBDC's would skip the bank, be issued an controlled by the central bank, without the need of a bank middle man infrastructure. They have been deployed in China, and the nearly every western central bank has announced plans to pilot these. Personally they scare me.
JumpCrisscross 4y ago
Monetarily, CBDCs connect the central bank to depositors. This enables monetary helicopter money, deeper negative interest rates (can’t do this with cash), and a host of other powerful tools.
christkv 4y ago
A digital central currency handled by the central bank will centralise all transactions in that currency in one ledger available to the authorities. Perfect way to monitor you citizens.
corobo 4y ago
I was initially snarky but if they manage to pull it off it wouldn't hurt as a case study for the rest of the world. The quicker we remove Visa and Mastercard as gatekeepers, the better. If you sell a product right now that shows a bit of ankle you're classed a high risk merchant and have no alternatives but to pay higher rates or give up. I'd like an alternative, but I don't yet trust the people who brought us Brexit to do it. If anything I'm assuming they're being scammed and we'll find out in a few years. Inb4 there's a massive scandal where the person coming up with the crypto coin is mates with the PM and the project gets cancelled.

I keep seeing this and not understanding the point of it. Does anyone have insight? I already have a digital pound in my bank account.

by dom96 4y ago

I keep seeing this and not understanding the point of it. Does anyone have insight? I already have a digital pound in my bank account.

eptcyka 4y ago

This way, the banks still need to exist for every day accounts. Otherwise, they'd only be able to do lending.

iamben 4y ago

Right? "At the other end, you could say I need a little wallet full of internet cash to buy things on Amazon" It's already almost frictionless shopping on Amazon with my existing bank/pound?

ZiiS 4y ago

Sounds like it is attempting to cut Visa/Mastercard out of paying for things online (i.e. Amazon) rather then being a traditional crypto.

deleted 4y ago
[deleted]

OJFord 4y ago

HMRC would love it I'm sure. I'm not sure there's any benefit to 'users', nor why (non-central) banks would care either really, beyond having a new thing to race to be an early provider of and grow marketshare (some would like that, especially more modern/fintechy ones, and others hate it I suppose).

rwmj 4y ago

It seems to be a solution in search of a problem, and probably also relates to the then Chancellor now PM announcing last year that he wanted to make the UK "a global hub for cryptoasset technology and investment"[1]. Since crypto is now generally regarded as a scam by the wider public, that has been quietly forgotten, but apparently the BoE didn't get the memo yet. The latest thing is they want to use the digital currency to "bank the unbanked", ignoring that basic bank accounts already exist, and banks are required to provide them[2]. [1] https://www.gov.uk/government/news/government-sets-out-plan-to-make-uk-a-global-cryptoasset-technology-hub https://www.gov.uk/government/news/government-sets-out-plan-... [2] https://www.gov.uk/government/collections/basic-bank-accounts https://www.gov.uk/government/collections/basic-bank-account...

azangru 4y ago
> It seems to be a solution in search of a problem Maybe the next step will be to create one? :-)
- AzzieElbab 4y ago
  It aims to combat strategic shortages of the # signs
krona 4y ago
> and banks are required to provide them Do you know if any of the political dissidents in the UK who have had their accounts shut down have successfully challenged a bank in court?
- ben_w 4y ago
  > political dissidents Who? Do you mean like the IRA? Or do you mean like Sinn Féin, Plaid Cymru, and the SNP? I've not actually heard of any private individual in the UK getting un-banked. On the other hand, I do assume there's a need to prove one's identity and if that fails an account may be closed, and identity can be too expensive for some people. Not sure how to resolve that.
  - helsinkiandrew 4y ago
    Apart from a few Russian billionaires, about 25 people in the UK (£61K in total) have had their bank accounts "frozen" - it seems mostly Jihadist terrorists who have left the country to fight with ISIS: https://www.dailymail.co.uk/news/article-2994515/Only-25-British-terror-suspects-bank-accounts-frozen-despite-600-UK-jihadists-travelling-fight-ISIS-report-reveals.html https://www.dailymail.co.uk/news/article-2994515/Only-25-Bri... If you were found guilty and sentenced for money laundering, funding terrorism, or political corruption etc, I would guess many banks would not want you to have an account with them. There's a list of "sanctioned" people/organisation - who would probably find it hard to open a bank account in the UK: https://www.gov.uk/government/publications/the-uk-sanctions-list https://www.gov.uk/government/publications/the-uk-sanctions-...

Carstairs 4y ago

From what I can gather since your money is stored at the BOE rather than your high street bank it should help avoid another "too big to fail" type situation that happened in 2008.

ilammy 4y ago

How about removing ability of private banks and payment systems to unilaterally decide without a court order who you can or cannot transfer money to? How about giving that power to a random government official instead? And paving a way to non-fungible earmarked money while we’re at it.

neongreen 4y ago

It should be explained in this Bank of England working paper (part B and box C), but honestly even after reading through it I don’t quite get it. https://www.bankofengland.co.uk/-/media/boe/files/paper/2023/the-digital-pound-consultation-working-paper.pdf?la=en&hash=5CC053D3820DCE2F40656E772D9105FA10C654EC https://www.bankofengland.co.uk/-/media/boe/files/paper/2023... - Update 2: see nr’s comment below. - Update 1: my guess would be that private money (think Venmo) and crypto have a chance to win over commercial bank money (think bank accounts and transfers) for the general public, and the government thinks it’s a potential threat (probably wisely IMO). God knows why the bank industry doesn’t have its shit together, but even in the EU I’ve come to feel suspicious towards bank transfers. Maybe a transfer will take five seconds, maybe one day, maybe a week with no explanation why. Bank apps, even modern ones (N26 etc) are still somewhat meh. The part of my brain that thinks “ought” a lot is screaming “no, everyone ought to use bank transfers and they ought to be good”… but objectively they are a hit and miss. A CBDC is at least going to be stored in a single database, so maybe it’ll be working a bit better.

nr378 4y ago
> Update: my guess would be that private money (think Venmo) and crypto have a chance to win over commercial bank money (think bank accounts and transfers) for the general public, and the government thinks it’s a potential threat (probably wisely IMO). Venmo is really still commercial bank money - any deposit in a Venmo account is backed 100% by a deposit in a commercial bank account. > God knows why the bank industry doesn’t have its shit together, but even in the EU I’ve come to feel suspicious towards bank transfers. Maybe a transfer will take five seconds, maybe one day, maybe a week with no explanation why. Bank apps, even modern ones (N26 etc) are still somewhat meh. EU banks use a combination of SEPA and SEPA Instant, and for a payment to go via SEPA Instant both the sender and recipient have to be connected to the SEPA Instant scheme and settle via a common system (e.g. TIPS). Where this isn't the case, payments fall back to SEPA, causing a lack of predictability at time of payment. The status quo in the UK is much better, every bank is on Faster Payments (the UK equivalent of SEPA Instant), and have been for almost a decade. This makes bank-to-bank transfers in the UK fast and predictable. > A CBDC is at least going to be stored in a single database, so maybe it’ll be working a bit better. All UK bank transfers settle via the Bank of England's RTGS system, which means at heart, everything is already in a single database anyway.

wuiheerfoj 4y ago

In essence, bank accounts are somewhat pointless in the modern age. Banks are all required to provide the same service (more or less) and waste a shitton of money to make it happen and be regulated for it. Obviously getting rid of consumer bank accounts overnight would be a fiscal catastrophe, so they’re going to phase them out to ease the blow. That’s my 2c anyway

mjburgess 4y ago
This is a good way of putting it. Pounds in your bank aren't "digital currency" in this sense. They're privately provide bank IOUs. You still need cash to avoid using a bank. With digital pounds, you can "stuff cash under your mattress" and use it without a bank. Iirc, the central bank keeps an anonymous ledger that you have "digital access" to. You can use an intermediary, eg., a bank, to keep track of the transaction and prevent deannonymisation by the central bank. Though i think you can also completely avoid that too.
nordsieck 4y ago
> Obviously getting rid of consumer bank accounts overnight would be a fiscal catastrophe, so they’re going to phase them out to ease the blow. I don't know how the UK is run, but in the US, it wouldn't matter at all. Banks could easily replace all deposits with a loan from the Fed. The annoying part would be figuring out how ATMs get funded. I'd be fine with a few government ATMs (police stations, city hall, DMV, etc. would be obvious places) and the rest paid, though.

mytailorisrich 4y ago

No, the money we have in our bank accounts is not 'digital currency', it's a credit of 'normal' fiat currency. Central Bank Digital Currencies (CBDC) are more similar to cryptocurrencies.

redeyedtreefrog 4y ago

Economists would surely love the anonymised spending data, were it to be made available. Though it would have to be heavily aggregated to avoid any individuals being identifiable by their spending times and locations. Retailers would presumably save by not having to pay fees to Visa, MasterCard, Stripe, etc. For consumers, I assume that at first it will be used by early adopters just for the novelty value. Maybe eventually there will be some small monetary incentive to use it instead of visa. Conspiracy theorists will say that they're going to ban cash and force people to use it. Conspiracy theorists are wrong.

heartbeats 4y ago
> Economists would surely love the anonymised spending data, were it to be made available. They could get this from banks already. > Retailers would presumably save by not having to pay fees to Visa, MasterCard, Stripe, etc. These are already low in Europe due to regulation.
- redeyedtreefrog 4y ago
  > They could get this from banks already. No they can't. > These are already low in Europe due to regulation. For sure, it's not going to save vast amounts of money. The original comment said "I already have a digital pound in my bank account". I am merely pointing out that though it may seem entirely frictionless and free to spend online already, there are costs involved.
  - heartbeats 4y ago
    > No they can't. What do you mean "can't"? My bank certainly has the information, since I can see it online if I log in. Of course they would have to change the law, but this also goes for the digital pound.

heywherelogingo 4y ago

An central point of easy, precise control and programmed permissions. The current banking system can sort of do some of that - they want it done properly. Pure control.

krona 4y ago

There are many advantages (to the government). One is this will CBDCs will effectively be a digital ID with a full financial transaction history. Secondly, it would prevent bank runs from happening. Thirdly, monetary sovereignty. This is a big one for the EU. It's all in the EU CBDC working paper https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2713~91ddff9e7c.en.pdf https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2713~91ddff9e...

JumpCrisscross 4y ago
> it would prevent bank runs from happening This is not true. > monetary sovereignty. This is a big one for the EU. This is only true to the degree Bitcoin is a threat to the euro or pound.
- krona 4y ago
  > This is only true to the degree Bitcoin is a threat to the euro or pound. It's got nothing to do with Bitcoin and more to do with dedollarization. Read the working paper.
  - notahacker 4y ago
    The threat of dollarization of the UK economy is pretty minimal, and I'm not seeing how the present proposal to grant individuals optional rights to hold a relatively small sterling balance in a basic bank account administered by the BofE rather than some other entity changes that. The working paper seems more worried by the proposed Libra (remember that!) than the USD...
  - JumpCrisscross 4y ago
    > Read the working paper I did. It [1] referenced a paper [2] to claim "the rise of digital money could threaten monetary sovereignty," though it's more concerned with "digital currency issued by 'BigTech,'" for example Libra, than Bitcoin. The sovereignty argument is predicated on a threat of substitution. > more to do with dedollarization Your working paper doesn't mention dollarization as a threat to European monetary sovereignty. (The EU seeks to dedollarize its economy.) "Digital dollarization" has nothing to do with the dollar per se, but instead refers to the replacement of national currencies with non-national digital currencies. [1] https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2713~91ddff9e7c.en.pdf https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2713~91ddff9e... page 13 [2] https://www.nber.org/system/files/working_papers/w26300/w26300.pdf https://www.nber.org/system/files/working_papers/w26300/w263...

nr378 4y ago

This really just seems to boil down to a state-provided bank account rather than anything more meaningful, which is not necessarily a bad thing but is unnecessary given there is already a competitive market for bank accounts (all of which are covered by state guarantees such as FSCS protection or FDIC insurance).

justinzollars 4y ago

> I already have a digital pound in my bank account CBDC's would skip the bank, be issued an controlled by the central bank, without the need of a bank middle man infrastructure. They have been deployed in China, and the nearly every western central bank has announced plans to pilot these. Personally they scare me.

JumpCrisscross 4y ago

Monetarily, CBDCs connect the central bank to depositors. This enables monetary helicopter money, deeper negative interest rates (can’t do this with cash), and a host of other powerful tools.

christkv 4y ago

A digital central currency handled by the central bank will centralise all transactions in that currency in one ledger available to the authorities. Perfect way to monitor you citizens.

corobo 4y ago

I was initially snarky but if they manage to pull it off it wouldn't hurt as a case study for the rest of the world. The quicker we remove Visa and Mastercard as gatekeepers, the better. If you sell a product right now that shows a bit of ankle you're classed a high risk merchant and have no alternatives but to pay higher rates or give up. I'd like an alternative, but I don't yet trust the people who brought us Brexit to do it. If anything I'm assuming they're being scammed and we'll find out in a few years. Inb4 there's a massive scandal where the person coming up with the crypto coin is mates with the PM and the project gets cancelled.