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      I am writing to you as my MP to ask you to raise my concerns regarding HM Treasury’s proposals for a UK Central Bank Digital Currency or CBDC. The proposals explore the development of a new centralised form of money. However, they fail to make a convincing argument for why a new digital pound is needed, especially in light of the risks it would pose to privacy, security, and equality in the UK. A SOLUTION IN SEARCH OF A PROBLEM The Treasury have not demonstrated the specific problem that a UK CBDC would solve. Their recent consultation document pointed to promoting financial inclusion and addressing the decline in physical cash use as key reasons, but these are not issues that can be exclusively or most appropriately addressed by a UK CBDC. Addressing this point, a recent report from the Economic Affairs Committee in the House of Lords described a UK CBDC as a “solution in search of a problem”. Introducing a CBDC would have a major impact on this country. There is insufficient evidence to support such a significant change which would redefine the relationship between the Government, banks, and the public. EXCLUSION Despite the Treasury’s purported aim of promoting financial inclusion, a CBDC is not the appropriate method to do so. These proposals sit against the backdrop of the increasing digitalisation of society and general decline in cash use. Introducing a new digital pound could push the UK further towards a cashless society, which would exacerbate financial exclusion for many who do not want or cannot use a CBDC. A digital pound would be spent through a smartphone, which would exclude people already impacted by the digital divide even further e.g. people who cannot afford a smartphone, elderly people who do not own or cannot operate one, or people living in remote locations with lower levels of connectivity and access. It is important that people can choose how to engage with the economy, and that the development of a UK CBDC does not undermine or crowd out physical cash infrastructure. The Treasury have also proposed “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. PROGRAMMABILITY I am concerned that a CBDC could be programmable as a currency, opening the door to invasive financial control. Neither the government or third party providers should be able to control the public’s spending. The Treasury’s consultation document suggested programmability powers should be granted to third party providers, which provide the infrastructure for intervention with the public’s finances. It provokes serious concern that, as a state-issued currency, it will be possible for the government – now or in the future – to take on such functions. For example, expiry dates could be imposed on the public’s private funds; limits may be placed on how much CBDC a person can hold at one time; interest rates and prices could be varied depending on someone’s identity; purchases could be prevented; taxes and fines automatically deducted; or funds frozen if a citizen acts in a way the government or third party provider disapprove of. Even with the best of intentions, any level of programmability is just a few steps away from serious abuses of power. This would be a serious invasion of privacy and could breach human rights across the board including freedom of expression, assembly, and equality and non-discrimination rights. PRIVACY Experts have said that it would be virtually impossible to develop a CBDC without a comprehensive digital identity system meaning that information about financial transactions would likely be tied to identity. As the current proposals allow transactions to be recorded and kept in a core ledger, anyone with access to the ledger – from public authority to hacker – could access personal transactional and identity information. These plans would also permit third party providers to exploit the public’s data for marketing purposes. The new surveillance opportunities this creates from a variety of actors is incredibly concerning. SECURITY A centralised CBDC system would create a huge platform of population data and would be a “critical piece of national infrastructure”. This would provide hostile state and non-state actors with a large target to focus cyberattacks on, with potentially disastrous consequences. 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 proposals are still in the early stages and there is still time to shape the development of a digital pound, which is why I am asking you to raise my concerns with the Treasury at the earliest convenience. If you are interested in finding out more about this issue, please contact Big Brother Watch at info@bigbrotherwatch.org.uk I look forward to hearing from you. Kind regards,

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