The Bank of England’s Calculated Doubt on Digital Pounds

When Andrew Bailey says he’s “not convinced” about a retail digital pound, my analytical instincts perk up. The Bank of England governor’s recent skepticism in Kyiv wasn’t just bureaucratic caution - it was a masterclass in identifying weak value propositions.

Wholesale vs Retail: A Tale of Two CBDCs

The wholesale version (for interbank transactions) progresses smoothly because it solves actual problems: settlement efficiency, ²⁴⁄₇ availability, and reduced counterparty risk. But the retail version? It’s solving problems that don’t exist for most consumers. Faster payments? We have that. Financial inclusion? Requires more fundamental solutions than blockchain tech.

Three Structural Flaws in Britcoin’s Case

1. The Privacy Paradox: Public distrust of government-issued digital surveillance tools is palpable. Unlike decentralized crypto, every transaction would be visible to the BoE.
2. Banking Instability Fears: If citizens move deposits to central bank accounts during crises (and they would), commercial banks lose their funding base overnight.
3. Solution Without a Problem: As Bailey noted, current systems already facilitate efficient retail payments. CBDCs offer marginal improvements at best.

My Professional Verdict

As someone who analyzes monetary systems daily, I’d score this:

• Wholesale CBDC: ⁸⁄₁₀ utility
• Retail CBDC: ³⁄₁₀ (and that’s being generous)

The Bank’s caution isn’t Luddism - it’s recognizing that not every technological “innovation” deserves adoption. Sometimes, the most financially literate decision is saying “no.”