7 KEY ISSUES
1. A SOLUTION IN SEARCH OF A PROBLEM
A UK CBDC would have a major impact on this country.
There is insufficient evidence to support such a significant change that would transform the financial landscape, endanger privacy and a range of human rights, create security risks, and could irreversibly redefine the relationship between citizen and state. Parliament’s Economic Affairs Committee described the UK CBDC proposal as a “solution in search of a problem”.
2. PRIVACY INTRUSION
Generalised surveillance of CBDC transactions would be inevitable given the context of the current legal landscape, particularly counter-terror law, anti-money laundering law and investigatory powers law.
Every transaction would be recordable and anyone with access to the core ledger – be it a public authority or hacker – could potentially see these transactions.
3. PROGRAMMABLE MONEY AND FINANCIAL CONTROL
The potential to program the public’s personal finances or welfare payments could lead to financial control, an invasion of privacy, potentially a breach of the right to protection of property and, depending on the limitations set, could pose a serious threat to a range of other fundamental rights – from freedom of expression, to freedom of assembly and protection from discrimination.
Whilst the consultation document says this Government will not seek to program the digital coin, future ones could – and it promises to allow companies to program our money, who could be subjected to government pressures. In recent years, money has become a target for private and state actors around the world attempting to shut-down and digitally debank campaigners and silence voices.
For example, the Canadian Government used emergency powers to freeze the bank accounts of suspected protesters against vaccine mandates. More recently, PayPal cancelled the account of a UK journalist and free speech campaigners. Despite the risks, the consultation document praises the “potential benefits of programmability for innovation”.
4. DIGITAL ID, CBDC AND DISCRIMINATION
It is nigh on impossible to issue a UK CBDC without a comprehensive digital identity system. Combining digital identity and CBDCs poses a serious risk of surveillance, security breaches, hacking/identity theft, and discrimination.
Everyone should have the right to access the economy with or without digital currency, and with or without digital ID. The consultation document proposes “tiered wallets” where “users with limited forms of ID could open basic digital pound wallets allowing limited, low-value payments”.
Creating tiered levels of access to money in exchange for increasing amounts of identification amounts to a discriminatory, identity paywall that would most affect migrants, ethnic minorities, older people, and poorer people, who are least likely to hold advanced forms of ID.
5. DATA EXPLOITATION
The consultation points out that providers can use personal data to “develop marketing activities” and “tailor products and services”.
Exploiting personal data in this way would endorse mass surveillance and exploitation of the public’s sensitive personal data, further shrinking the private sphere in a growing digital panopticon.
6. SECURITY RISKS
A centralised CBDC system would create a huge platform of population data and, as such, become a “critical piece of national infrastructure”. This would provide hostile state and non-state actors with a large target to focus cyberattacks on.
Combining digital identity and CBDC poses a serious risk of security breaches and hacking/identity theft and a successful breach could put the entire public at risk.
The decision to develop a UK CBDC should not be made by the Bank of England and HM Treasury alone – yet the pilot planned for 2025 seems to minimise parliamentary involvement.
We hope that the Government drops the plan for a CBDC after this consultation. But if not, Parliament must be included in any plans so that the possibility of a new digital pound is subject to proper scrutiny and democratic decision making.