Central Bank Digital Currencies (Economic Affairs Committee Report) - Motion to Take Note

Part of the debate – in the House of Lords at 12:53 pm on 2 February 2023.

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Photo of Lord Desai Lord Desai Non-affiliated 12:53, 2 February 2023

My Lords, I thank the noble Lord, Lord Bridges, for the committee’s excellent report. Around the time it was issued, I wrote for the website of OMFIF, a think tank that I am involved with, totally rejecting and criticising this scheme. It is not so much that it does not solve a problem but that it will create one.

The most significant problem it will create is that it will deprive ordinary people of easy access to cash. We have to be honest: it may be that cash is declining in terms of total payments but larger payments are made by richer people and smaller payments are made by poorer people. As somebody in Parliament, I feel that it is my duty to care for the smaller people rather than the big people. I do not care what commercial or central banks do with each other about sending money via digital or non-digital means. What concerns me is people who are budgeting their expenditure from day to day. They value cash, access to cash and the ability to approach their bank in person to explain the problem they are in.

When I lived in Camberwell and I went to my local bank branch—that is a rarity nowadays; there are no local bank branches left, which is bad enough—I could see how people were in serious trouble and could not solve their problem unless they were face-to-face with their bank so that they could explain why they needed money and how they could have it. They needed cash. It is also true that we have numeracy problems at all age levels in this country. It is bad enough having to count cash. CBDCs will alarm people in their day-to-day behaviours. It is not a question of what problem CBDCs would solve; I am worried about the problems that they would create, which would be much more serious than the problems they would solve.

The original sin in this respect, if I may say so, is bitcoin. Because it was called a coin, people thought it was money. It is not; it is a token. I call it a “Zen token” because it has Japanese origins. It has no useful value whatever and it has a very uncertain exchange value. Only a gambler would hold bitcoin. Because bitcoin was called a coin instead of a token, lots of copies of those assets have been introduced. As we saw from the FTX debacle, a lot of money can be swindled out of ordinary people.

The sooner we get away from this digital nonsense, the better off we will be—definitely in terms of people’s welfare. We have enough problems with the unequal distribution of money and so on. We certainly do not want to add to those by chasing the latest technology just because it is the latest technology and harming our own citizens. Rather than asking what the Bank of England wants to do, can the Government please say categorically that they have no intention of introducing CBDCs, which would deprive ordinary people of access to cash as they have always known it? Anything else would be deeply harmful to the body politic.