The former finance minister from Greece, Yanis Varoufakis, who is currently working as a pundit (anti-capitalist one), and apparently, novelist, seems to have found a rather playful avenue for his economic concept. He recently published Another Now novel, where he presents a fascinating concept of an alternative (parallel to ours) universe.
His world is based on the idea that the stock markets have been abolished, and the central banks play a crucial role in the economy (their role is literally central). Every month they pay out a “personal capital” to every citizen, which is a form of allowance, as the banks are holding all the saving accounts in the country. Every transaction is being administered with the use of special digital currency (yes, so basically this is a CBDC-based system), and thus the whole process and the system itself is 100% transparent. This is the factor that annihilated commercial banks, their interest rates, and their capital-gathering-driven goals.
This is a really utopian take on the possibilities of the technology we might soon be witnessing. It appears that the developing of the first fully-operating CBDC might be a matter of time, as the United Kingdom has recently announced that they are joining the race. The special Chancellor’s Taskforce has been brought to life, and presented on the conference during the United Kingdom’s FinTech Week. It has been promised that the Taskforce will put a lot of efforts into engaging with various stakeholders, and will research the possible rewards, crucial practicalities, and the risks that may occur. All that is an effort which is supposed to be leading towards the building of a safe environment and eventually allowing consumers to open Bank of England accounts.
This is a really challenging task, as “Britcoin” creators have really no foundations. The only two working CBDCs could not possibly be copied and implemented on the market in the United Kingdom. Why? The first one, also called the ‘Sand Dollar’, is the Barbadian currency issued in October 2020. It is blockchain-encrypted, and backed by Barbadian Dollar. But the thing is, its main purpose is to serve as a tool of quick money transferring between the islands for the government in case of some natural disaster. The other one is Chinese Yuan, and there are several political reasons for the lack of information on it. Also, it is still being piloted, and is currently available only in selected cities, and the outcomes are still to be found out).
What should the Britcoin be like?
Obviously, there are different needs in the back of the head of the UK designers and economists. Their version of CBDC is supposed to be prioritizing interbanking over retail. This way, a slight signal for crypto investments will be sent, as well as this will leave some space to the future developments of the project (regarding the retail segment).
Of course the Taskforce needs some expertise, and they received it from Kalifa Review in February. It highlights the needs of a society that would be transferring towards cashless operations, and thus maybe making the whole payments system cheaper. The estimates say, that if 30% of the UK’s GDP was digital-currency-circulated, we would almost instantly witness a 3% growth of the GDP itself.
And British society seems to be ready for this solution, as it really fondly welcomed services like TransferWise, Nutmeg, PayPal or Revolut. So should they be offered a reliable, stable and functional central bank digital currency, there should not be many hesitations. But this also means that Varoufakis’ idea of the society reliable on the central bank and its currency could be really close (closer than we would think) to reality.
Should you want to dwell a little deeper into the topic, and get to know the delicacies of it, as well as read a comprehensive analysis and opinion, you should definitely go and check out Disruption Banking article about the Britcoin. To access it, simply use the following link and find Oliver Rhodes’ piece: https://disruptionbanking.com/2021/04/28/full-fat-high-caffeine-maximum-strength-britcoin/.