Former Bank governor Mervyn King remains unconvinced of the case for Britcoin, a digital currency backed by the UK’s central bank.
Speaking on a panel organised by London think tank RUSI today, King questioned the merits of a CBDC which he warned would raise privacy issues, threaten commercial banks and expose the payments system to the risk of technical failures. King warned that a UK digital currency backed by its central bank (CDBC) would not address key issues within the international payments system and labelled Britcoin a “solution without a problem.”
“It’s far from obvious introducing a CBDC would actually resolve the issue of cross border payments,” said King.
According to King a major concern when it comes to international payments systems is that Russia and China could set up an alternative platform to Belgium-based SWIFT, the world’s dominant international messaging system used to make cross border transactions.
“You could easily find yourself in a world in which there are at least two rival systems of making payments and a CBDC won’t be at all helpful in resolving that,” King Said.
“It’s about privacy,” he continued. “If a French President believes that if he makes a small transaction to his mistress, that the CIA will know about it then it’s not a very sound basis on which to put in place an international payment system.”
King added that cross border payments are currently slowed down by concerns over money laundering and identity verification – issues which a CBDC is unlikely to solve.
The comments come less than a week after a House of Lords Committee, on which King sits, published a damning report on CBDCs.
HM Treasury and the Bank of England are jointly consulting on plans to introduce Britcoin and Lord King today called for any future plans for a UK CBDC to be put before parliament.