Former Bank of England economist Neil Record has criticized the proposal for a digital pound, labeling it as expensive and unnecessary.
Criticism of the Digital Pound
In an article for The Telegraph, Neil Record labeled the digital pound initiative as financially rather than consumer-driven. He argues that declining cash usage poses a threat to the Bank's economic model, considering the interest income from cash holders as a vital source of revenue.
Alternatives and Their Advantages
Record pointed to the robust digital payment systems in the UK, such as bank accounts and mobile payment platforms. He argues that a government-backed digital currency would struggle to compete, particularly if it doesn't offer interest on balances.
Additional Concerns and Prospects
Beyond financial considerations, Record raised concerns about privacy and low public trust in a state-controlled digital currency. He urged the Bank of England to prioritize core responsibilities like controlling inflation. Other entities, like the Prudential Regulation Authority, are also involved in exploring the digital pound.
Record repeatedly highlights that the benefits of the digital pound appear questionable amid existing solutions and current research expenditures.
