Is ‘programmed’ money the future? The Bank of England has called on ministers to decide whether a central bank digital currency (CBDC) should be programmable.
This can ultimately give the issuer of the money control over how the recipient / consumer spends it.
Programming can become a key feature
According to The Telegraph, Tom Mutton, a director at the Bank of England, said at a conference on Monday that programming could become a key feature of any future central bank digital currency. This means that digital money can be programmed which can place a restriction on transactions.
“There can be some socially beneficial outcomes, which prevent activity that is seen as socially harmful in one way or another. But at the same time, it could be a restriction on people’s freedoms,” he warned.
Control over how money is spent
A digital currency can make payments faster, cheaper and more secure, but also provide new technological possibilities, including programming. It can effectively allow a party to a transaction, such as the state, employee or supplier, to take control of how the money is spent.
Earlier this month, Sir Jon Cunliffe, the bank’s deputy governor, said digital currencies could be programmed for commercial or social purposes, even to the point of children spending pocket money.
He told Sky News you can think of smart contracts in which the money can be programmed to be released only if something happens.
Can control children’s pocket money
“You can think of giving your children pocket money, but programming the money so that it cannot be used for sweets. There is a whole range of things that money can do, predetermined money, that we cannot do with current technology. ”
The Bank of England released a press release on its website on 21 November last year setting out the next steps of the central bank digital currency.
Development phase has yet to be approved
“CBDC would be a new form of digital money issued by the Bank of England and for use by households and businesses for their everyday payment needs. It will exist with cash and bank deposits, rather than replacing it. ”
The bank has indicated that the consultation will start in 2022 and the authorities will then have to decide whether it is satisfied to move to the “development phase”, which could extend over a few years.
Source: The Telegraph, Sky News, Bank of England
