An Urgent Call for Good Governance
In light of the latest phase of the ongoing – ‘Great Debate” on the Remaking of Money – ‘The Great Digital £ Debate’ during May and into June – it is clear that the advent of Central Bank Digital Currencies (CBDCs) is not just an incremental shift; it constitutes a monumental leap into largely uncharted territory for the UK with incalculable consequences.
Design Alone is Not Sufficient
Promoted by the Treasury select committee, the Bank of England have offered its latest digital Pound design iteration for a consultation closing 7th June.
It is a major step, with impossible-to-predict consequences, to adopt a centrally controlled and potentially programmable national currency – which any central bank currency will doubtless be – whatever the initial intent and design.
It is also well to remember that such centralised currencies are inherently programmable, and no design is impervious to modification over time. The malleability of these currencies leaves them vulnerable to re-engineering, potentially compromising the safeguards initially in place. Relying solely on design assurances is a short-sighted approach that fails to address the long-term. Even if the current incumbents can be trusted, there is no knowing what future governments might choose to do.
Inadequate Assurances and Insufficient Oversight
Simple assurances of privacy and democratic protection offer little protection. These assurances lack standing in the present and offer no guarantees whatsoever for the future. Moreover, the existing understanding and oversight of CBDCs within Parliament are clearly insufficient, leaving a void where robust scrutiny is needed.
The Imperative for Good Governance
Fundamental principles of good governance demand the establishment of a solid framework from which to navigate this new landscape. However, the structure of the Bank of England was never designed for such a task and is ill-suited to shoulder this responsibility.
Central banks globally have already been exceeding their mandates, exhibiting significant scope-creep into areas previously the domain of the elected, especially over the past decade*. Introducing CBDCs without appropriate governance can only exacerbate this problem.
A UK Commissioner for Digital Money:
To address these critical concerns, we urgently advocate for the creation of a dedicated regulatory body: the UK Office of the Commissioner for Digital Money. Drawing inspiration from the successful model of the Information Commissioner’s Office (ICO), this must be accountable to Parliament and empowered with a clear and comprehensive mandate.
Ensuring Accountability and Transparency
Allowing the UK Office of the Commissioner for Digital Money to play a pivotal role in ensuring transparency and accountability among all stakeholders, including the Bank of England, the Treasury, and the government. Upholding democratic values and safeguarding against potential abuses, this office will be the guardian of our monetary system for the digital era. It is needed right now even more clearly than when the ICO was first established.
Embracing the Future Responsibly
The digital pound holds the promise of a more efficient financial landscape, but without the proper governance infrastructure, it also poses significant threats to democratic freedoms.
As we stand, on the cusp of another digital revolution, we must proceed with caution. Not only will a national digital currency produce unprecedented oceans of sensitive data on just about every citizen (with tempting commercial and intelligence possibilities inherent) and have the potential of remote-control of people or groups via the potential for programmability, but this is now in the context of the AI revolution happening around us, further raising the stakes via the possible uses and abuses of the data.
It may be, and probably is the case, that CBDCs in general and the Digital Pound in particular are now an inevitability. If so, we must move ahead – but with a clear vision and the establishment of a UK Office of the Commissioner for Digital Money, ensuring that our digital future is built on a foundation of accountability, transparency, and democratic principles.
Having Your Say
There has been scant coverage in the media and the Bank of England does not seem to have been at pains to ensure coverage of even their own anodyne materials which seem designed to play down the civil issues, risks and need for engagement and public debate.
So now is the time for UK citizens to have your say – and for those from elsewhere to give thought to the issues raised here.
Responding to the Bank of England Consultation
All the details for responding to the consultation Bank of England’s consultation are here.
Barry E James, Founder Humane Economics, Industrial Fellow at Royal Docks School of Business and Law at the University of East London. Views expressed here are my own and not necessarily those of the organisations I lead or support.