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BONUS: The Bank of England’s Big Decision on Digital Currency · Merryn Talks Money

0:08
Speaker 1: Hello, and welcome to this bonus episode of Merin Talks
0:11
Speaker 1: Money with Me. Today, I've got John Steppack is an
0:14
Speaker 1: exciting treat fuel for the entire episode. And also with
0:18
Speaker 1: us today is Emily Nicole, who is a crypto reporter
0:21
Speaker 1: at Bloomberg. Now, Emily has been doing something quite interesting,
0:24
Speaker 1: which is talking constructively to the Bank of England. Mostly
0:27
Speaker 1: all of us have been doing recently is just religiously
0:29
Speaker 1: criticizing the Bank of englond But Emily, you've been in
0:33
Speaker 1: to have a conversation with someone at the Bank of
0:36
Speaker 1: England about their response to the rise of cryptocurrencies.
0:40
Speaker 2: Right, yeah, I mean well actually we had them come
0:42
Speaker 2: to us. How fancy, you know, making this trade across
0:45
Speaker 2: thread Needle Street over to Bloomberg HQ. But yeah, we
0:49
Speaker 2: had a conversation about central bank digital currencies, which to
0:52
Speaker 2: be clear, it's not quite like a cryptocurrency, but is
0:55
Speaker 2: their kind of version of dabbling with this world of blockchain.
0:59
Speaker 2: And I sat down with Tom Mutton, who is the
1:01
Speaker 2: Director of Fintech at the Bank of England and is
1:03
Speaker 2: running the whole show on a CBDC.
1:06
Speaker 1: Okay, well, let's start with I mean, obviously we have
1:09
Speaker 1: a hugely educated audience, but it's conceivable that not everybody
1:13
Speaker 1: will know what a CBDC is, So can we just
1:16
Speaker 1: start by having you explain to us what this is.
1:20
Speaker 2: So a CBDC is what a lot of central banks
1:24
Speaker 2: around the world, I think most of them now are
1:26
Speaker 2: planning to do as their kind of response to the
1:29
Speaker 2: rise of cryptocurrencies and payments that are running probably a
1:32
Speaker 2: bit faster than their traditional infrastructure, and how they can
1:35
Speaker 2: improve their own systems with that technology. Potentially, most of
1:40
Speaker 2: them are still in development base considering whether they should
1:43
Speaker 2: do it or not, looking at the technology and kind
1:45
Speaker 2: of poking around. Some of them have been a bit
1:47
Speaker 2: more successful than others. But as my conversation with Tom went,
1:52
Speaker 2: he kind of explained, you know, the various parameters that
1:55
Speaker 2: a UK digital pound might look like.
1:57
Speaker 3: It's a digital bank note, it's for every day payments,
2:01
Speaker 3: something you can use online or in store. Because it's
2:04
Speaker 3: intended to be like cash. It won't be remunerated, so
2:07
Speaker 3: it won't pay an interest rates for the early days
2:09
Speaker 3: at least will apply a limit on how much people
2:11
Speaker 3: can hold, just to make sure we have a smooth introduction.
2:14
Speaker 3: So we're probably thinking ten to twenty thousand pounds individual limit.
2:18
Speaker 1: Okay, so we've got a digital pound. Effectively, it's like cash,
2:22
Speaker 1: but it's not cash. It's digital cash, so it has
2:24
Speaker 1: a lot of the characteristics of cash. But I think
2:28
Speaker 1: a lot of people would look at this and they'd say,
2:31
Speaker 1: there's nothing wrong with the payment system that I use.
2:34
Speaker 1: I can transfer money very fast, my debit card works
2:36
Speaker 1: really well, my credit card works very well, I can
2:39
Speaker 1: use PayPal. I have no problem here. Why do I
2:41
Speaker 1: need a different payment system? What does Tom say about that?
2:45
Speaker 2: Yeah, I think it's recognized by the bank giving them
2:48
Speaker 2: and by probably all of us listening to this, that
2:51
Speaker 2: you know, the UK's payment infrastructure, at least in terms
2:55
Speaker 2: of how retail users use it, is very advanced compared
2:58
Speaker 2: to some others around the world. We're all used to
2:59
Speaker 2: getting a thing instantly, so this isn't necessarily something that
3:02
Speaker 2: we need compared to other economies that might have already
3:04
Speaker 2: experimented with this, like Nigeria and Jamaica. But Tom's answer
3:08
Speaker 2: to why they would want to deal with this is
3:11
Speaker 2: that it's not only that we need to make the
3:13
Speaker 2: UK more future proof. This is something that they may
3:16
Speaker 2: need to think about at some point.
3:18
Speaker 3: We've seen a lot of innovation in payments and that's
3:20
Speaker 3: really benefited users. The UK as an early adopter of
3:24
Speaker 3: contactless payments and that's very convenient and I think merchants
3:28
Speaker 3: like it. But we need to make sure we continue
3:30
Speaker 3: to be at the front of that innovation, and we're
3:33
Speaker 3: thinking about how can we support that innovation, and we're
3:37
Speaker 3: very interested in the idea that we could provide the
3:41
Speaker 3: safest form of money available. The government, the bank, the
3:44
Speaker 3: Financial Conduct Authority thinking about how to support innovations in
3:49
Speaker 3: things like non bank stable coins, including through legislation and regulation.
3:54
Speaker 3: We very much see a central industry currency as part
3:57
Speaker 3: of a diverse monetary system with troy that all anchored
4:01
Speaker 3: around confidence and certainty and money, and we very much
4:06
Speaker 3: think that actually having the ability to move from a
4:09
Speaker 3: digital pound into a regulated stable coin payment stable coin
4:15
Speaker 3: into takingnice bank deposit into a conventional bank deposit into
4:19
Speaker 3: cash is really important because it ties the monetary system
4:22
Speaker 3: and all our different forms of money together. That's why
4:24
Speaker 3: we've really emphasized the importance of the digital pound being
4:28
Speaker 3: interoperable and open with other forms of money.
4:31
Speaker 2: But it's also that they want to find a way
4:33
Speaker 2: that cash can remain relevant to the economy. It's definitely
4:36
Speaker 2: still important to many consumers, but is also usable by everyone.
4:40
Speaker 2: So I don't know about you guys, but I'm definitely
4:44
Speaker 2: an Apple pay person. I don't really carry a wallet
4:46
Speaker 2: around anymore, let alone in a debit cards or anything
4:49
Speaker 2: like that. And so the digital pound is their version
4:51
Speaker 2: of saying, Okay, we want to make cash usable for
4:53
Speaker 2: you and usable for everybody else, especially if you don't
4:56
Speaker 2: want to be carrying around banknotes.
4:58
Speaker 1: Okay, but I still, I mean, I'm old right, still
5:02
Speaker 1: don't quite get what it does for someone who likes
5:05
Speaker 1: to use cash. So people who like to use cash
5:08
Speaker 1: tend to use it because they feel they control it
5:10
Speaker 1: much more easily. And we all seen those studies about
5:12
Speaker 1: how much more you spend if you're not using physical cash,
5:15
Speaker 1: if you're using a debatory credit card, etc. They want
5:17
Speaker 1: to hold it and have it, and they're also very
5:20
Speaker 1: concerned by their financial privacy and the only anonymous way
5:24
Speaker 1: to pay for anything is to do it with banknotes.
5:28
Speaker 1: So even though a digital pound is from the point
5:31
Speaker 1: of view of a Bank of England the same as cash,
5:35
Speaker 1: from the point of view of a user, it's just not,
5:39
Speaker 1: is it.
5:39
Speaker 2: Yeah, So Tom had a really great answer to this,
5:42
Speaker 2: I think because the Bank of England hasn't been asked
5:44
Speaker 2: this question a lot.
5:45
Speaker 4: So this is a big topic. It's really big.
5:47
Speaker 3: First of all, the anonymity of cash is not something
5:52
Speaker 3: that somebody chose to do. It's just a function of
5:56
Speaker 3: the format of cash, and weeping clear that cash will
6:00
Speaker 3: continue to be available astrong for as long as people
6:02
Speaker 3: wish to use it. So I'm not sure cash is
6:05
Speaker 3: the right comparator. I think the better comparator is to
6:08
Speaker 3: say ninety plus percent of the money we use for
6:11
Speaker 3: payments today is electronic. Or electronic money creates a data
6:15
Speaker 3: footprint and it's really a choice of who do you
6:18
Speaker 3: want to have that data and how do you want
6:19
Speaker 3: them to protect it.
6:21
Speaker 4: The really crucial.
6:22
Speaker 3: Thing is that there will be no data shared with
6:26
Speaker 3: the Bank of England, no personal data shared with the
6:28
Speaker 3: Bank of England or the government. We will know what
6:31
Speaker 3: transactions have happened, but will have no idea what person
6:34
Speaker 3: did them. The what it is provided by the private
6:37
Speaker 3: sector will know who the person was, but they won't
6:41
Speaker 3: know what the transactions were. And that's a really big
6:43
Speaker 3: difference because at the moment. Private financial institutions know both
6:48
Speaker 3: sides of that. They know the individual and the transaction history.
6:52
Speaker 3: Under our system we're proposing, we would know the transaction
6:55
Speaker 3: history but not the individual. The what it would know
6:57
Speaker 3: the individual but not the transaction history, and that we
7:01
Speaker 3: think offers people the reassurance that the Bank of England
7:05
Speaker 3: will not receive their personal data and also that we
7:07
Speaker 3: have no insensitive to use it for commercial gain.
7:10
Speaker 2: And what he was saying there is that the system
7:13
Speaker 2: that they may put in place one day, if they
7:16
Speaker 2: do a digital pound, it will be pseudonymous, which means
7:19
Speaker 2: that they'll be able to see that this wallet use
7:22
Speaker 2: this many digital pounds to buy this thing at this shop,
7:25
Speaker 2: but they won't know who that person is. They'll be
7:27
Speaker 2: able to see, like you know, rough stuff on spending data,
7:29
Speaker 2: but you yourself aren't going to be identifiable. And none
7:33
Speaker 2: of that data really gets shared with the Bank of
7:35
Speaker 2: England or with the government. It's all going to be
7:37
Speaker 2: in the hands of wallet providers who make those tools
7:40
Speaker 2: or softwares apps that you might store your digital pound with,
7:43
Speaker 2: and as users, you get to determine how much of
7:46
Speaker 2: your data you give up. You have to agree you
7:48
Speaker 2: have to consent. It's all under these fancy GDPR rules
7:51
Speaker 2: we have these days. Whether or not that's still appealing, though,
7:55
Speaker 2: is an entirely different question. You know, it's very difficult
7:58
Speaker 2: to think that, you know, as most people in crypto
8:02
Speaker 2: are very we all always imagine them as people who
8:05
Speaker 2: are really concerned about wanting to hide from the man
8:07
Speaker 2: and hide from the government and do everything super illicit criminal.
8:11
Speaker 2: Imagine them being fully brought into the Bank of England's messaging.
8:15
Speaker 1: Probably not no, And I'm not brought into it either.
8:18
Speaker 1: I mean, John, you and I have discussed this a
8:20
Speaker 1: lot over the years about the risks to one's privacy
8:24
Speaker 1: from cbdc's that they might say, well, you know, we
8:28
Speaker 1: sequester it here and sequester it there, and no one
8:30
Speaker 1: can see the whole lot, and one person can see
8:32
Speaker 1: her transactions but not your transactions, can see the list
8:35
Speaker 1: of transactions, and other people knew whose wallet it is,
8:38
Speaker 1: and there's you know, all sorts of walls between the
8:40
Speaker 1: private sector that has the wallets and the Bank of
8:43
Speaker 1: England that actually runs the money system. But in the end,
8:47
Speaker 1: what's happening here is we're moving into a system where
8:50
Speaker 1: every single bit of a financial data exists outside our control,
8:53
Speaker 1: and I find that very frightening, don't you.
8:56
Speaker 5: I mean, yeah, this worries me, and I also struggle
9:02
Speaker 5: to see the rationale for it. I'm trying to be
9:06
Speaker 5: open minded. And one thing I found interest in this
9:11
Speaker 5: interview that you did, Emily is that Tom does come
9:15
Speaker 5: across as someone who's quite enthusiastic about this, and also
9:22
Speaker 5: emphasizes a number of times that the Bank of England
9:25
Speaker 5: is just kind of building the infrastructure. Because I've been
9:29
Speaker 5: reading a Bank for International Settlements report on this as well,
9:32
Speaker 5: and the picture of the central banks globally because this
9:35
Speaker 5: is a global thing, seems to be that they want
9:38
Speaker 5: to act as almost like they can have the Microsoft
9:40
Speaker 5: so like the operating system, and then you'll get private
9:45
Speaker 5: companies that launch apps on top of that operating system
9:49
Speaker 5: that then introduced all these exciting new was it the
9:53
Speaker 5: the Bank for International Settlements talks about how you could
9:56
Speaker 5: have entirely new types of economic arrangement that' possible today,
10:02
Speaker 5: and it's just that I think I'm just thinking, yeah,
10:03
Speaker 5: but we are mean that seems as if it may
10:05
Speaker 5: benefit central banks, like they can put a time limit
10:08
Speaker 5: or on my money, for example, if they want me
10:10
Speaker 5: to expend it, but I'm not sure how it necessarily
10:13
Speaker 5: benefits me. And there's an awful watter of retskin there.
10:16
Speaker 5: But I mean, do you get the impression that the
10:18
Speaker 5: Bank of England is recognizant of that.
10:23
Speaker 2: I think it's definitely this is still a project under consideration.
10:27
Speaker 2: You know, while you listen to a conversation with Tom
10:31
Speaker 2: or you hear, for example, the Bank of a Deputy
10:33
Speaker 2: Governor John Cunneff talk about this a lot as well.
10:36
Speaker 2: You hear them talk about CBDC and it sounds pretty
10:38
Speaker 2: They're like, they're excited about it, but it's also something
10:41
Speaker 2: that they haven't even decided whether or not they're going
10:43
Speaker 2: to build it yet. They say they reserve the right
10:45
Speaker 2: to decide whether or not we might have a digital
10:47
Speaker 2: Pound for at least in a few years.
10:49
Speaker 3: We think the public policy case, the sort of conceptual case,
10:53
Speaker 3: is made. Now we've got to get down to the practicalities.
10:56
Speaker 3: So we're going to spend a couple of years looking
10:57
Speaker 3: at that. Around the middle of the decade, we'll make
11:00
Speaker 3: a decision together with the Government, which would involve Parliament
11:04
Speaker 3: and a wide range of stakeholders around whether or not
11:07
Speaker 3: we build, and if we were to build, then we
11:10
Speaker 3: think the end of the decade would be the earliest
11:12
Speaker 3: point at which one might be available for people to use.
11:15
Speaker 2: So it's a long way out. Many things could change.
11:18
Speaker 2: There's even the possibility that it might not even be
11:20
Speaker 2: built on blockchain at present.
11:22
Speaker 3: I find it hard to imagine we'd use a public
11:24
Speaker 3: ledger right now. I think there's scalability issues, the security issues,
11:29
Speaker 3: there's certainly governance issues. But it's moving so I think
11:33
Speaker 3: the idea of Central Bank would use a public blockchain
11:36
Speaker 3: is a long way from a near term reality, but
11:40
Speaker 3: we should certainly experiment with it because we can't rule
11:42
Speaker 3: it out unless we experiment with it. But who knows
11:44
Speaker 3: if we had this conversation in ten years, perhaps to
11:46
Speaker 3: be saying this has moved on.
11:48
Speaker 2: They had a technology forum where they brought in lots
11:51
Speaker 2: of private market participants to discuss what a CBDC could
11:55
Speaker 2: look like from a tech perspective, and no one in
11:58
Speaker 2: that room was able to agree even by the end
12:01
Speaker 2: of the forum as to what that might look like,
12:03
Speaker 2: which tells you something. Right, it's still very very much
12:06
Speaker 2: deliberated as to whether or not a block chain underneath
12:09
Speaker 2: all of this is the best way to go, and
12:12
Speaker 2: that means that the developing apps on top of it,
12:15
Speaker 2: will they be useful? Is this something that we really need?
12:17
Speaker 2: Is all still very much up in the air.
12:19
Speaker 1: Emily, because you know, like John, I'm open minded and
12:22
Speaker 1: I like to do it occasion a little tit bit
12:24
Speaker 1: of research. I had a look on the section on
12:26
Speaker 1: the Bank of England website where they talk about this,
12:29
Speaker 1: and they have a little section where it's a day
12:32
Speaker 1: in the life of the user of a CBDC and
12:35
Speaker 1: it is exactly the same as a day in the
12:38
Speaker 1: life of an ordinary in person going through a process
12:42
Speaker 1: of spending money. At the moment, there's absolutely nothing there
12:45
Speaker 1: that looks remotely different. So I don't want to come
12:47
Speaker 1: back to where I was before saying a contunertime, what's
12:50
Speaker 1: in it for people? But I really really can't. And
12:53
Speaker 1: when I listen to what John has just said, and
12:55
Speaker 1: when I look at the literature I've read on it,
12:57
Speaker 1: all I can see in it is injured to individual freedom,
13:01
Speaker 1: as John says, putting the ability to put a time
13:03
Speaker 1: limit on money so it disappears if you don't spend it,
13:06
Speaker 1: the ability to arrange things such that you can only
13:09
Speaker 1: spend your money on certain things. You know, for this month,
13:11
Speaker 1: no one gets to buy anything except for food. Slightly extreme,
13:13
Speaker 1: but you never know, and that person over there actually
13:15
Speaker 1: doesn't get to buy any food. There's the danger of
13:18
Speaker 1: it developing into a full social credit style system. And then,
13:21
Speaker 1: of course there's the other danger which it facilitates negative
13:24
Speaker 1: interest rates. And there was lots of talk around this
13:26
Speaker 1: when interest rates were solos to be nearly negative. Are
13:29
Speaker 1: we going to have to go to negative interest rates?
13:30
Speaker 1: How do we facilitate that without people putting cash in
13:33
Speaker 1: their basements, etc. And a central bank digital currency does
13:37
Speaker 1: exactly that. It facilitates the shift to negative interest rates
13:40
Speaker 1: when required. I can't believe that we're going to be
13:41
Speaker 1: required again, but who can know? Who can know? And
13:44
Speaker 1: that's dangerous for us as well. So I still, did
13:46
Speaker 1: you get any sense when you were talking to Tom
13:49
Speaker 1: of the genuine long term upside to anybody except for
13:54
Speaker 1: those who like to be in control.
13:57
Speaker 2: One thing that stood outs me through my conversation with
13:59
Speaker 2: Tom was kind of around that that what is the
14:02
Speaker 2: main selling point for consumers here? And that was that,
14:06
Speaker 2: you know, if you were concerned that the banks aren't
14:09
Speaker 2: the safest place to store your money, which most of
14:11
Speaker 2: us aren't these days, but it is a hangover of
14:13
Speaker 2: two thousand and eight. You know, some people might still
14:15
Speaker 2: be concerned about it. This is probably going to be
14:19
Speaker 2: the safest option out there on the market in terms
14:21
Speaker 2: of where you could store some cash. You know that
14:23
Speaker 2: it's going to be in a reserve with the Bank
14:25
Speaker 2: of England.
14:26
Speaker 4: It can't be touched.
14:27
Speaker 2: Every means of interacting with your money would always be
14:30
Speaker 2: through apps that you have to give your consent and
14:33
Speaker 2: permission for. So in terms of you know, whether or
14:36
Speaker 2: not they could put a time limit on your money,
14:37
Speaker 2: I mean it's if you'd think that maybe the government
14:40
Speaker 2: might get so distoping and start to start enforcing those
14:42
Speaker 2: kinds of rules on us, then potentially yes, but that's
14:45
Speaker 2: you know, quite a long shot. I think probably at
14:48
Speaker 2: this point.
14:48
Speaker 1: It's just the possibilities, isn't it the positive?
14:51
Speaker 2: Yeah, it's the risk of possibility.
14:53
Speaker 1: Yeah.
14:53
Speaker 2: But I thought it was quite interesting that you know
14:55
Speaker 2: that he would bring up that as a as a
14:57
Speaker 2: as a potential upside. I guess if you're about banks,
15:00
Speaker 2: then this is the safest place to put your money,
15:02
Speaker 2: because you know, it's definitely it's something that maybe crypto
15:06
Speaker 2: people think about quite a lot, but not so much
15:08
Speaker 2: the general public.
15:09
Speaker 3: We'd focus on keeping the money safe, providing the infrastructure,
15:12
Speaker 3: and the private sector would focus on offering a really
15:14
Speaker 3: great user experience, really great innovation for users. And that
15:18
Speaker 3: feels like a really good public private partnership if we
15:21
Speaker 3: did Digital Pound. It's about providing choice and it's not
15:25
Speaker 3: about crowding somebody out or disintermediating. And it's not about saying, oh,
15:29
Speaker 3: we can see crypto coming, or we can see big
15:31
Speaker 3: tech coming and we want to force them out. If
15:33
Speaker 3: we saw a threat from crypto, big tech, etc. We'd
15:38
Speaker 3: regulate it to make it safe. This is more about
15:40
Speaker 3: providing a service which is useful to people.
15:43
Speaker 4: In the UK.
15:44
Speaker 3: There is a big question though about is this going
15:48
Speaker 3: to disintermediate banks because you can keep your money in
15:52
Speaker 3: a bank account and there is a degree of risk
15:55
Speaker 3: that your bank maybe become insolvent, but you're protected by regulation,
16:00
Speaker 3: by the Deposit Insurance Scheme, the Financial Services Compensation Scheme.
16:03
Speaker 3: So we hope and we believe it's not something people
16:06
Speaker 3: should be worried about, but there is this concern from
16:10
Speaker 3: some people that if you could just hold it straight
16:13
Speaker 3: away at the central bank, which is the safest place
16:15
Speaker 3: to hold your money, just kids. It cuts out the
16:17
Speaker 3: middle person. So we've adjusted the design of the digital
16:22
Speaker 3: paln to make sure we take account of that.
16:24
Speaker 5: I do think this is an interesting thing, because I mean,
16:27
Speaker 5: that's a really good point. The crypto thing was basically
16:30
Speaker 5: bond from two thousand and eight and fear of the
16:34
Speaker 5: mainstream money system, if you like. But how much actually
16:39
Speaker 5: in common do CBDCs have with for what Albert traditional crypto,
16:46
Speaker 5: Because obviously, you know, it's interesting we're talking about this
16:49
Speaker 5: when crypto was kind of born from essentially a kind
16:52
Speaker 5: of scientific anarchistic community, and now we're really talking about
16:57
Speaker 5: it as being the ultimate tool for social control, kind
17:00
Speaker 5: of like the big state actually, you know, can there
17:03
Speaker 5: dominate in everything, which is slightly ironic, but it also
17:07
Speaker 5: makes me think, well, I don't see how this could
17:10
Speaker 5: crow the lakes of bitcoin, for example.
17:13
Speaker 2: They're not intended to be like for like, or even
17:16
Speaker 2: run on the same plane. I think it's often a
17:18
Speaker 2: misnomer that crypto and CBDC are the same thing. The
17:22
Speaker 2: only way in which they are similar is that they
17:24
Speaker 2: might both potentially be on blockchain but that's not even
17:27
Speaker 2: a given yet, so really there's not that much similarity
17:30
Speaker 2: between them, because the Bank of England's digital pound, for example,
17:34
Speaker 2: would be you know, you'd only be able to hold
17:36
Speaker 2: a maximum of ten twenty thousand pounds. There's no interest
17:39
Speaker 2: to be earned on it. You can't really do much
17:40
Speaker 2: with it besides spend it in shops if that's if
17:43
Speaker 2: it's accepted as legal tender, whereas with crypto, it's a
17:47
Speaker 2: free for all. You can do whatever you like pretty much,
17:49
Speaker 2: and there's nobody really restricting how much you can hold
17:51
Speaker 2: where you can spend it, because there are always ways
17:54
Speaker 2: to get it into other systems and put it on
17:57
Speaker 2: gift cards or lend it, borrow it, trade it, hedge its,
18:01
Speaker 2: anything you like. That's partly why it's unregulated and why
18:05
Speaker 2: it's considered highly risky because there is no rawway to
18:08
Speaker 2: oversee it at the minute in a way that regulators
18:10
Speaker 2: could ever be comfortable with.
18:12
Speaker 5: And is there any wild that this actually works, because
18:14
Speaker 5: I know that obviously a lot of smaller nations have
18:17
Speaker 5: been experiment and I have no idea how far those
18:20
Speaker 5: experiments have gone. But is there somewhere that we can
18:23
Speaker 5: point to and see oh, actually this is kine of
18:26
Speaker 5: how a CBDC walks.
18:28
Speaker 2: So there are a handful of countries that have actually
18:32
Speaker 2: launched a CBDC to the point of it being in
18:35
Speaker 2: circulation in the population at large. One of those is Nigeria.
18:39
Speaker 2: It's Eenira is probably one of the most developed versions
18:42
Speaker 2: of a CBDC that we can look at, and even
18:45
Speaker 2: then it's a little bit difficult to see whether you
18:47
Speaker 2: could draw any comparisons to a UK CBDC. So for
18:52
Speaker 2: the Enira, usage is up about sixty three percent this
18:55
Speaker 2: year according to the Central Bank governor there, and that
18:58
Speaker 2: is largely because one of the purposes of the een
19:01
Speaker 2: ira is it's a means of payment for its welfare system.
19:05
Speaker 2: So if you are one of the millions of Nigerians
19:07
Speaker 2: who use its government's welfare system, you would get paid
19:10
Speaker 2: in eenira. That is obviously something that the UK could consider,
19:14
Speaker 2: but it's not necessarily something that's entirely required. The cash
19:18
Speaker 2: system in Nigeria, about ninety percent of its monetary spending
19:22
Speaker 2: every year is in cash, and it's also facing a
19:24
Speaker 2: massive cash shortage, so there's a really big incentive for
19:27
Speaker 2: the government and the central bank there to be pushing
19:29
Speaker 2: in Eira's adoption not something that we really face here elsewhere.
19:34
Speaker 2: China is usually the biggest example of a CBDC that's
19:37
Speaker 2: in development still so not quite out there, but has
19:40
Speaker 2: some big adoption usage. But one of the reasons why
19:43
Speaker 2: it is so adopted in China is because it's a
19:45
Speaker 2: very different government system. The state is a lot more
19:48
Speaker 2: involved in everybody's daily lives in China than it is
19:51
Speaker 2: in the UK. And I guess the presence of a
19:54
Speaker 2: CBDC there almost feeds into the concerns that Maren was
19:57
Speaker 2: voicing about privacy and liberty in this instance.
20:00
Speaker 1: Emily, from your conversation, what do you think the next
20:02
Speaker 1: step is? What are the logistics around deciding whether this
20:04
Speaker 1: will go ahead or not go ahead? What will we
20:07
Speaker 1: we as individuals see next.
20:10
Speaker 2: So Tom said that the Bank of England extended its
20:13
Speaker 2: consultation actually on CBDC recently and so that's live until
20:17
Speaker 2: the thirtieth of June and people can submit responses and
20:21
Speaker 2: answer questions that the bank has on, you know, what
20:23
Speaker 2: they think a CBDC could be used for, how it
20:25
Speaker 2: could be designed, et cetera. After that there will be
20:30
Speaker 2: roughly two years of experimentation, trying to find use cases,
20:33
Speaker 2: dabbling with various ways they could build a CBDC, and
20:38
Speaker 2: only then will we get the decision as to whether
20:40
Speaker 2: or not this is worth it.
20:41
Speaker 4: What we've got to think about is can we actually
20:44
Speaker 4: do this?
20:45
Speaker 3: Is it a practical thing to do, is it operationally feasible,
20:48
Speaker 3: is it technologically viable?
20:51
Speaker 4: Is there a commercial case for it?
20:53
Speaker 3: And that's what we're going to spend the next couple
20:55
Speaker 3: of years researching.
20:57
Speaker 2: But it's quite interesting to know this is something that
20:59
Speaker 2: the Bank of England chosen to dedicate its time on,
21:01
Speaker 2: it's chosen to dedicate money to. With everything that's going
21:04
Speaker 2: on in the rest of the economy at the minute,
21:06
Speaker 2: I mean, it's probably facing a lot of criticism for
21:08
Speaker 2: that and whether or not, you know, how much should
21:11
Speaker 2: we be future proofing our economy around technology and the
21:14
Speaker 2: adoption of a potential CBDC one day?
21:17
Speaker 1: Yeah, I think a lot of us would prefer that
21:18
Speaker 1: the Bank Kingland put all their energies into thinking about
21:21
Speaker 1: the here and now. But let's see how that turns out. Emily,
21:24
Speaker 1: one last question for you. I'm ambushing you here and
21:27
Speaker 1: I'm hoping, not hoping, but wondering if you might give
21:29
Speaker 1: a different answer to this question than pretty much every
21:32
Speaker 1: other guest we've ever had on Merin talks money, bitcoin
21:36
Speaker 1: or gold. You have to hold up for ten years.
21:39
Speaker 2: Let's see how I can answer this as an impartial reporter.
21:42
Speaker 1: No, you don't have to be an impartial reporter. I'm
21:44
Speaker 1: canceling your impartiality right now. Twenty minutes. Okay, if you
21:48
Speaker 1: had to hold it for ten years, ten years, bitcoin
21:53
Speaker 1: or goal.
21:54
Speaker 2: Well, to be clear, as a Bloomberg reporter who covers crypto,
21:57
Speaker 2: I am not allowed to own bitcoin, really, so I'd
21:59
Speaker 2: probably have to go for gold in that instance. But
22:05
Speaker 2: I think that every asset has its own appeal, and
22:10
Speaker 2: partly I think a lot of the appeal of bitcoin
22:12
Speaker 2: has been to a generation like mine. I'm younger, right,
22:16
Speaker 2: I'm twenty eight. We don't really get where the appeal
22:19
Speaker 2: of gold was because it's not a standard that we
22:21
Speaker 2: ever interacted with. It's not something that has really been
22:24
Speaker 2: in our lives as young people, other than you know,
22:27
Speaker 2: wearing it as jewelry. So being sold a digital gold
22:30
Speaker 2: in the form of bitcoin probably sounds quite exciting to
22:32
Speaker 2: people in my generation, whether or not they should listen
22:35
Speaker 2: to that is entirely different, and I reserve the right
22:38
Speaker 2: to remain impartial on that matter.
22:40
Speaker 1: Yeah, fair enough. John and I are much more on
22:42
Speaker 1: the physical bitcoin side rather the digital gold side.
22:45
Speaker 2: Are Yep?
22:46
Speaker 1: Yep?
22:47
Speaker 5: Physical bitcoin all the week, all the way.
22:50
Speaker 1: Emily, thank you so much for joining us today. That
22:52
Speaker 1: was really really interesting and gave John and I are
22:54
Speaker 1: one full opportunity to pretend to be open minded. We
22:56
Speaker 1: enjoyed that, didn't we, John?
22:57
Speaker 5: Oh yeah, some alone's nice to pretend.
22:59
Speaker 2: Thanks for having me, h,