The Bank of England's fintech director sought to allay concerns that a digital pound would threaten privacy, confirming that the digital pound would not be interoperable with cryptocurrencies as they currently exist.
Bank of England Fintech Director Mutton Talks About Digital Pounds and Cryptocurrencies
Speaking at the Financial Times' Crypto and Digital Assets Conference, Tom Mutton, who is responsible for running the CBDC unit at the Bank, said "privacy and anonymity are being used synonymously in a way they shouldn't be."
Anonymity means that no data about an individual is available, while confidentiality means that individuals have some degree of control over their own data.
Noting that the UK's financial crime rate is very high, but privacy is a top priority, Mutton said the central bank has never tried to anonymize the digital pound. “There is no incentive or reason for us to offer a digital pound unless it has the highest privacy standards,” Mutton said.
While the digital pound won't be anonymous, Mutton said the central bank is open to consultation on "some protection" on low-level transactions.
Mutton also denied the claim that private sector digital currencies are more secretive than digital sterling. “All electronic payments create a data footprint, the real question is to whom this data goes and what the terms of use are,” he said.
While Mutton acknowledged that anonymous payments can be made using cryptocurrencies, he argued that anonymity is "a public policy issue and something that should not be allowed to continue".
Mutton also said that a digital pound cannot work with currently existing cryptocurrencies because "cryptocurrencies do not fulfill any of the functions of the concept of money".
However, Mutton noted that "a well-regulated payments stablecoin, if introduced in the future, will certainly be part of its interoperability goals."
*Not investment advice.
