National digital currencies could bypass activist banks
Following reports that Nigel Farage was denied access to his Coutts account because of his political opinions, Britain’s poshest bank finds itself at the centre of an escalating row. Reportedly claiming that the politician didn’t “align with their values”, Coutts have decisively found themselves on the wrong side of public opinion. According to the latest YouGov polling, published on Wednesday, 62% of Britons believe that banks should not be allowed to “remove customers who have personal or political beliefs that don’t align with the bank’s values”. Only 15% felt that they should.
What’s more, the bank has managed to rile up the Government. Andrew Griffith, a Treasury minister, fired the first warning shot: “The privilege of a banking license in a democracy should imply a duty not to ‘debank’ because you disagree with someone’s views.” A few hours later, Prime Minister Rishi Sunak weighed in: “No one should be barred from using basic services for their political views. Free speech is the cornerstone of our democracy.”
Big talk is all well and good, but whether Sunak intends to do anything about it is another matter. Banks are currently free to terminate customers without explanation — and Farage is not an isolated case. To combat this, Downing Street should press the industry for a voluntary code of conduct. This should be followed by legislation to enshrine customer rights in law.
The problem goes deeper, though. On this issue and others the banks have forfeited our trust. We therefore need the option of cutting the cord altogether. Within a few years, that might just be possible — but there’s a catch: it would rely on the Bank of England pressing ahead with its plans for a Central Bank Digital Currency (CBDC). It doesn’t exist yet but this digital version of the pound is already known, unofficially, as “Britcoin”.
Many commentators have attacked the concept in the belief that it would give the state the ability to monitor and control people’s financial transactions, but the state can already do this through our existing bank accounts. In theory, we could go off-grid by restricting ourselves to physical cash but, as Farage himself points out, that’s less than practical: “Without a bank account, you effectively become a non-person.”
As things stand, almost all of us are dependent on access to banking services. Even if the state never abuses this power over our lives, there’s evidently no guarantee that the banks won’t overstep the mark. However, if we were able to hold cash in electronic form in a basic account managed by the Bank of England, then we could bypass the commercial banks while still being able to participate in the digital economy.
It’s not yet clear exactly what form Britcoin will take or whether the Bank of England will implement the idea at all. If it does go ahead, those of a libertarian bent should not condemn the proposal out of hand. Instead they should fight for a Britcoin that empowers ordinary people.
For a start, there must be no abolition of physical cash. More importantly, every British citizen should have the right to use digital cash free from the involvement of private corporations. After all, the best way to get the banks to behave is to give their customers the ability to cancel them.