Ex-Bank of England Economist Says Digital Pound is a 'White Elephant,ʼ Costly and Useless

The Bank of England’s push for a digital pound has come under intense scrutiny, with critics arguing that the initiative is unnecessary, costly and lacks public demand.

According to a report from The Telegraph, former Bank of England economist Neil Record has labeled the project a “white elephant,” suggesting that it is driven more by the Bank's financial interests than by consumer needs.

Despite having already spent £24 million on the project, the Bank has yet to provide a compelling justification for its necessity.

A Controversial Initiative with No Clear Demand

The Bank of England's ambitious plan to introduce a central bank digital currency (CBDC), popularly dubbed the ‘digital pound' or ‘Britcoin,' has been severely scrutinized.

According to Neil Record, the initiative is expensive and unnecessary, lacks public demand, and could jeopardize the Bank's financial model.

The digital pound was first proposed by the Bank of England and HM Treasury in 2021. It was envisioned as a new form of money that would complement, not replace, traditional cash and bank deposits.

However, given the rapid decline in cash usage—from 51% of all payments in 2013 to just 12% in 2023—many question whether the project serves any real purpose.

Record argues that while digital transactions, such as contactless payments and mobile banking, have revolutionized the financial world, no one has clamored for a state-backed digital currency.

Instead, he believes the Bank of England is motivated by self-preservation, seeking to maintain relevance in an economy where cash is becoming obsolete.

Fight For Relevancy, Business Model, And Privacy Concerns

The Bank's primary source of income is derived from interest foregone by holders of physical currency, and the dwindling use of cash threatens its economic model.

The project's viability is further questioned because private banking solutions already offer digital payment services, including interest-bearing accounts and financial security for deposits under £85,000.

In contrast, the proposed digital pound offers no interest and appears redundant compared to existing banking infrastructure.

Moreover, concerns over privacy and government oversight add to the skepticism surrounding the initiative.

The idea that the Bank of England—widely seen as an extension of the government—would manage the digital pound raises fears of state surveillance over personal financial transactions.

With £24 million already spent on research and development, critics, including Lord Forsyth, have lambasted the initiative as a "solution in search of a problem."

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