October 29, 2022 - 8:00am
After the hasty departure of former prime minister Liz Truss, the UK’s position as a crypto-friendly nation suddenly came under threat. But now that Rishi Sunak, only half-jokingly described in the media as a “crypto-bro”, has taken over, the new PM has reignited the hopes of advocates who wanted to turn Britain into a global “crypto hub”.
Sunak will now purportedly attempt to fulfil the promises he laid out as chancellor back in April this year. These include introducing a “financial market infrastructure sandbox,” establishing a “Cryptoasset Engagement Group,” and enabling stablecoins — digital tokens equalling one unit of fiat currency — to be used “as a recognised form of payment.” The end goal of all this would be to uphold Britain’s status as the global leader in financial innovation.
The UK has a history of being a pioneer in this field. In the mid-1950s, a British bank called Midland created one of the first “Eurodollar” trades, a form of financial arbitrage that sought to profit from sending US dollars overseas to bypass regulators. Midland used Eurodollars to dodge the UK government’s capital controls on the pound, but this eventually morphed into a shadow currency system that facilitated most global finance and trade. Crypto is simply a modern-day iteration of “regulatory arbitrage”, though it will never reach the level of utility the mighty Eurodollar possesses today.
And most likely neither will “Britcoin,” the unofficial moniker for the UK’s proposed central bank digital currency (CBDC). Since searches worldwide for “CBDC” have skyrocketed to over eight times the average volume since last month, it’s likely Sunak’s favourable position on CBDCs will come under increased scrutiny over the next few weeks. Central bank digital currencies tend to be thrown into the same basket as cryptocurrencies, even though they possess no concrete association whatsoever. Having released research stating that the two are distinct, the UK government agrees. It does not appear to be using any crypto-related technologies to construct Britcoin.
That is also if Britain ever decides to start building it. As with crypto narratives such as Web3, the UK’s end goal of building and implementing a CBDC remains vague and unclear. In fact, efforts to arrive at a precise use for CBDCs from other developed nations have ended with press releases stating they are “investigating”, “looking at what it might mean” or issuing a recommendation to conduct more research.
Other than a way to implement absent payments infrastructure — like Jamaica’s CBDC will accomplish — there’s no concrete benefit to deploying a central bank digital currency in developed nations, especially ones like the UK that already possess world-class infrastructure.
This raises an important question: after much indecision, why is a stable(ish) democracy such as Britain pursuing a CBDC? The fact that China remains the only country to implement a fully-fledged CBDC — codename “DC/EP” — suggests that the only “innovative” uses for CBDCs could be to help autocracies limit privacy and freedoms. As soon as UK citizens realise this, Rishi Sunak’s positive stance on CBDCs may come back to bite him.
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Subscribe“…suggests that the only “innovative” uses for CBDCs could be to help autocracies limit privacy and freedoms. As soon as UK citizens realise this, Rishi Sunak’s positive stance on CBDCs may come back to bite him.”
I don’t have to understand any of this stuff to be certain that limiting privacy, and hence my freedom, is the intent. These people are not my friends.
Facial, Gait, syntax, retina, voice, Identity are already figured out and working, and UK has more cameras on than it has people – but just the start. And all you Phone Addicts are GPS tracked – everyone you are next to, and for how long, are also logged in…..
A proper digital currency through the Central Bank as an arm of government would be the ultimate. It would mean a Social Credit Score and 100% control as the Gov. could turn your wallet (on your phone) OFF. Like China where you may have passed a covid suspect – so your phone will not let you buy any transport ticket till you get tested. Your phone GPS saw the suspected persons GPS proximity, and shut it for purchasing transport.
You could be a known subversive (Your phone identified you as being at a protest) – now it will not buy you a train ticket to a city where a protest is going on.
You had meat twice in a row – your phone wallet will not pay for meat at a restaurant or shop for 2 days…. You took a plane to a Beach Resort – now your phone will only let you half charge your car for 3 weeks to pay back some of the Carbon…..
Literally terrified this is the way we are going, did you see china russia talking about a new gold backed currency today? To rival the dollar, maybe kill it if its not already dead….. https://www.foxbusiness.com/economy/russia-china-may-be-preparing-new-gold-backed-currency-expert-assures-us-dollar-safest-currency-today.amp
What happens when the dollar collapses? Hyperinflation? Complete financial crash? This is when they’ll strike.
Apart from your intemperate delusions in respect of the former Prince Charles’s supposed intellectual and personal qualities, I am a major enthusiast of your comments and I make no exception here. CBDCs will strip us of the last vestiges of our illusory freedoms. But the private banks hate CBDCs because they will – strip – them of their business. Who has more power, the banks or the governments mostly comprising their puppets? While a possible compromise is thrashed out country by country across the globe, I recommend that those of us enthusiastic for a more grounded trading network invest in Bitcoin, which the bxxxxxx cannot,
for all their effort, touch.
My brother (22) is obsessed with the crypto stuff, talking to him the other day he seems to reckon XRP will be part of the change over to a new CBDC apparently its backed by goldman sachs or one like that I believe? Anyone else know much about this? Didn’t have time to get into it at the time I don’t know much more than that about XRP or how it factors into a change over? He is young he could have the wrong end of the stick? He’s just bought a load of it.
Trader University Matthew Kratter is where to study this – example https://www.youtube.com/watch?v=0BnNtwtvcYs
He summarises “I believe that XRP is definitely a scam– it is a slow-motion pump and dump. I hope that the SEC and other regulators are ultimately able to send many Ripple Labs executives and founders to jail.”
Thanks for the info! I’ll check that out 🙂
Yes that’s it. Just one small technical change: phones can be left behind; the chip embedded in your body cannot.
Money is a promise that you accept to delay expenditure to a more convenient time and place. To be widely acceptable the promise has to be made by a creditworthy party and your ownership has to be evidenced in a way that others accept. Crypto currencies fail because there is no promise, you can only spend it if there is someone who wants to but it and you are at the mercy of the value they place on it. If it goes out of fashion it could be nil. The fact that people in the past might have sold it for vast profits means nothing because all the money that has been spent on buying them went to the sellers, nothing remains available for the buyers. Stable coins offer a fixed price but you need to check who is promising to pay it.
Blockchains can be used to evidence ownership of a promise by a creditworthy party but they are reliant upon a community of computer owners keeping their computers available to validate each transaction and enough of them participating in each transaction to ensure that each validation is incorporated in the blockchain to the exclusion of anyone attempting to validate the same promise at the same time somewhere else. The process is cumbersome and someone has to pay for the computing power and ensure the community follows the protocol. The promise is not registered to you so if you lose the number, or it is copied and spent before you do, you get nothing. Most people will not have direct access to the blockchain ledger and therefore will rely on an intermediary, thereby taking a risk on their honesty and competence, and of course losing their anonymity.
Rishi Sunak’s wife’s family company, Infosys, advocates blockchain technology, I am surprised at what they claim it can accomplish.
I have tried to fallow CBDCs and Blockchain for years, but not actually studying, just by reading articles. I have a question:
Why not just make the Digital £ exist merely as another form of the paper £, where Private banks still create them through loans as they do with Fiat, and so also do the bank accounts and transaction clearing just as they do now? Then the privacy is not so different; it goes through private business (Lloyds, say) where law protects privacy from Government without a search warrant. Just like now this would mean a small transaction fee, like are charged on credit and debit transactions now.
I know you think Blockchain would register the digital £ to you – and the Central bank clearing it would then track you, which it could if you elected that because you could also hold an account directly with the Central Bank, and then have no transaction fees, but give up the privacy essentially, as the blockchain would be registered to you.
But instead keep your Private Bank Account – for privacy the block chain record could remain with your Private Bank in their name, and not you – basically the Private Bank would own the digital money in their name, and you, like now, just own it as a liability on the bank ledger, just as now with fiat. You would own anonymous digital £ in the bank £ Pool, not with the blockchain in your name, but as a credit to your account from the total Digital Currency Pool the Bank held. – and the tracking of that digital £ in the banking system would be just as now – assets and liabilities on the bank ledger. The currency not linked to you, but as now, just to your Bank, and thus to your account, and thus to you. The digital £ merely a private bank asset and liability – not yours because the block chain would never be in your name, but in the name of your Bank; unless you held your account directly with the Central Bank.
(P.S. I assume Blockchain because the writer said ‘Stable Coins’ are part of it – but if it is Private Ledger Blockchain, or if it is DLT, or more likely something else – I assume it will track users on some chain to avoid theft and counterfiting)
This seems logical to me, allowing for a digital currency and yet giving the consumer personal financial security. It would be good if the writer of the article responded
That would be nice, except that allowing you that level of independence and autonomy is contrary to the whole purpose of a government-controlled crypto.
https://www.youtube.com/watch?v=cDbJOSlXUEU
oh dear, the blob speaks again
in the real world nothing stays the same for long, todays so called world class infrastructure is tomorrow’s crumbling legacy
not saying this is the correct innovation, but the argument that everything is perfect and we don’t need to innovate is wrong
Since with a fiat currency there is no practical impediment to a central bank like the BofE “printing” (I.e. creating) as much sterling as it wishes, I can’t see any advantage to moving to a crypto-currency at all. The fact that it sounds modern and cool does not make it useful.
Unless….Like there can never be more than 21 Million Bitcoin – say a actual Conservative got in power and had the Central Bank create a digital currency which could never have more than £ 3 Trillion. Now that would be wild. Like a self imposed ‘Gold Standard’ but there could never be a run on the gold, which is Why USA left it in 1971.
Just think of that – the Government spending would only be what had come in that day. Every day the amount of your government pension would change, the Bus Ticket Price varied, – the amount of currency is stable, so prices have to change to equal out the variables. Be a weird world.
Or prices and income stay the same – but today your tax on your pension is 10%, tomorrow it is 12% as the gov just approved buying £4 Billion more anti-tank rockets for Ukraine….. haha, be wild….every day is different as there is no buffer in the system.
You’re on to something here. I remember at the last big college I worked, there were think-tanks coming up with phrases like ‘future-proofing our institutions’, in this case higher education ones. For some reason, it made me feel uneasy, as though their continued existence was paramount to any practical purpose. I think what is happening now is that the internet has rendered many institutions, particularly those involved with creating and disseminating knowledge, obsolete. Now that information is readily available to almost everyone, they’ve moved on to secular morality aka wokeness in order to stay relevant.
Their edifice is crumbling, as you say, which is why they’re becoming crueler and more dishonest.
Our son’s experience as a freshman at an elite US college supports your point – although he likes the Calc lecturer he finds him a poor teacher, and therefore does all his learning online – and he got 100% in his midterm. But these demanding institutions are not only about disseminating knowledge (or brainwashing in many cases) they are about enabling the students to build formidable personal and professional networks – which just cannot happen online. That’s what we the people are really paying for.