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Former Bank of England (BoE) economist Neil Record has criticized the digital pound project, arguing that it has low consumer demand and provides no tangible benefits. He called the endeavor a “costly, useless project” that solely serves the central bank’s financial interests in a piece published in The Telegraph.
One of the main drivers of the push for a digital currency, according to Record, is the BoE’s diminishing revenue from cash usage. He stated, “none of the reasons quoted [by the Bank of England] seems to me to be compelling enough to set up a major financial project.”
He also pointed out that the central bank relies on the interest it earns from cash in circulation, and as digital payments replace physical money, its financial model faces challenges. “A world where cash becomes rarely used, and not widely held, would fundamentally damage the Bank of England’s economic model, and hence its existence in its current (independent) form.” – Neil Record
Record also questioned if a digital money backed by the government would be appealing. He pointed out that safe digital payments are currently available to UK customers via mobile platforms and banks. Existing banking services would be difficult for a central bank digital currency (CBDC) that offered no interest to compete with.
“So a Central Bank offering that looks to the customer very like a current bank current account would struggle to be appealing. U.K. current accounts can, and often do today, offer interest on balances.” – Neil Record
Additionally, he raised privacy concerns, suggesting that consumers might distrust the BoE’s involvement in digital transactions. Despite over £24 million ($30 million) already spent on research, Record believes the project lacks clear benefits.
The Bank of England and HM Treasury began exploring the digital pound in 2021. While discussions and consultations continue, no final decision has been made on its implementation.