There have been whispers of the Bank of England adopting digital currency for some time. Now, according to The Daily Mail, a task force of Treasury and Bank officials are said to report back to Chancellor Rishi Sunak on the merits of the Central Bank Digital Currency before the year is out. 

Dubbed ‘Britcoin’, the digital currency is expected to be a direct digital equivalent of the Pound Sterling. Benefits being touted by its ardent supporters include lower banking costs, quicker transaction times, and more effective quantitative easing. 

‘Britcoin’ to Facilitate Further Quantitative Easing 

And while we’re all for cheaper and speedier banking services, the concept of being able to pump new currency into the economy when times are tough is not a long-term solution to financial instability. In fact, it’s far more likely to compound matters further down the line, driving inflation upwards. 

Quantitative easing is a topic we’ve covered fairly extensively, as it’s a pivotal downfall of modern money mechanics. As ‘new’ currency is created (from thin air) and pushed into circulation, it has nowhere other to derive its value than from the existing supply. It literally siphons value, devaluing the entire supply. In layman’s terms - the value of the money you hold becomes less; its buying power has been diminished by the ‘new’ supply. 

Watch more about Modern Money Mechanics and the fallacy of quantitative easing in our Sight episode. 

A Private Blockchain Defeats the Purpose of Bitcoin

The second, more concerning aspect of this proposed digital currency is that it’s not being implemented leveraging the core nature of blockchain technology, being public transparency. In fact, its proposal is quite the opposite - a private ledger.

Our CEO, Michael Hudson, had this to say on the matter: 

“For me, this raises more questions than it gives assurances. What will be the benefit of the Bank of England saying they’re going to implement a digital token-based system? Are they going to implement this on a public blockchain, and will we be able to hold them accountable? Are they now going to show the creation of money and how much is in circulation? Will they then enforce, at a governmental level, the transparency of public funds? Because they would be able to do that with a public blockchain, but they’re not proposing that. All they’re saying is that they want to kick cash out of the system.

“‘Digital currency’ and the blockchain is just being used as fancy terms to trick the public into thinking this means transparency  - when it won’t. All they’re doing is talking about a digitalised private ledger - which the Bank of England very much knows about! They’re essentially still saying that they’re the only ones who will have sight of their ledger. So what have you changed for the better? Nothing. 

“If anything, it gives them more control.”

While only time will tell what an implementation of the digital version of the pound may look like, we urge you to take caution in seeing this as a positive move from the government and the central bank. Ultimately, it’s a clear indication that the modern financial structures are collapsing in a spectacular fashion, and the powers that be will do anything to avoid the true mess to be seen! 

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