Digital asset enthusiasts descended on London’s Mansion House last week for CityAM’s Crypto Spring Awakening. Among the speakers was our chief product officer Martin Hargreaves, who took part in a panel session examining the prospects for a digital pound.
Martin – backed by the Quant team – was much more bearish on unregulated cryptocurrencies than many of the attendees. When asked whether Bitcoin could fulfil the role of a central bank digital currency (CBDC), Martin responded: “Bitcoin isn’t a currency, it doesn’t hold its value. Its only value is in the hopes and dreams of the people that hold it. Unfortunately, that’s not a good basis for a sovereign currency.”
Martin was called on by the panel’s host, CityAM’s Crypto AM editor Darren Parkin, to give the audience an overview of the function of a CBDC. Martin explained that the pandemic had accelerated “a gap” in the currency system, in which people withdrew cash during crises as they perceived it as being a secure way to protect their funds. At the same time, many retailers began refusing to accept cash. This left citizens with no “risk free” method of payment that is invulnerable to a crisis – thus the need for a CBDC.
Martin was joined on the panel by Dr Lisa Cameron MP, who chairs the Crypto & Digital Assets All-Party Parliamentary Group (APPG); Lord Holmes of Richmond; and Eva Gustavsson, head of public affairs at Copper.co, a digital asset custody firm. Ms Gustavsson said that increased payments efficiency, financial inclusion, and more competition and innovation in the financial sector were amongst the benefits a UK CBDC could bring.
“The momentum is certainly there,” she said. “The latest tally is that 114 countries are looking at this now.”
Lord Holmes said that people rightly often raised issues around privacy and state control when discussing CBDCs, but that they “can help us understand citizens, and if data is used in a positive way, it could be truly transformational”. He said it was likely that a wholesale CBDC would be in use before it was extended to the retail market.
Dr Cameron called on all attendees to contact her APPG to tell them about the challenges in the digital asset market, with a view to the government creating “pragmatic policy [and] regulatory clarity”.
Citing the economic benefits she believed a CBDC can bring, she said: “We have to take it seriously… why would we not want to be part of this? We can’t afford not to be.”