Who is shaping the future of our money and payments system?

November 22, 2021

The Bank of England has said it will engage with a “diverse cross-section of expertise and perspectives” on a central bank digital currency – so why is it mainly listening to big finance and tech giants?

We at Positive Money were hopeful when the Bank of England announced a new ‘Engagement Forum’ on central bank digital currency (CBDC) earlier in the year.

The Engagement Forum, the Bank said, “will provide a forum to engage senior stakeholders and gather strategic input on all non-technology aspects of CBDC from a diverse cross-section of expertise and perspectives.”

For many years, Positive Money has been pushing for the wider public to be represented in these important discussions so that the future of money isn’t left to big finance. As such we welcomed this forum as a step in the right direction.

“Members”, the Bank of England said, “will be drawn from financial institutions, civil society groups, merchants, business users and consumers.”

But the membership announced so far tells a different story. Information obtained by Positive Money under a Freedom of Information request revealed that the Bank of England planned to include 3-4 representatives of ‘consumers/civil society’ in the Engagement Forum, out of a total membership of 20-25. 

In the end, the Bank of England announced a total of 31 members. Of this, we can only identify four as representing civil society or consumers – Citizens Advice Scotland, the Ada Lovelace Institute, the Overseas Development Institute and the Financial Services Consumer Panel – with the rest of the membership dominated by big finance and tech.

So, far from getting input from a “diverse cross-section of expertise and perspectives”, it appears the design and implementation of a CBDC will be shaped by industry incumbents, who have vested interests in ensuring that it is built around their business models, in ways that conflict with the public interest. 

Among the membership are representatives from the banking lobby group UK Finance, Facebook’s Diem Association, HSBC, NatWest, Morgan Stanley, Visa, Mastercard, Google, and PayPal. Are these multinational corporations, who have awful track records in misusing data, ripping off customers and going against the public interest, really the ones we should be entrusting with the future of our money?

We don’t need to look far for examples of what happens when the Bank of England predominantly listens to industry insiders and shuns representatives from wider society.

The Productive Finance Working Group (PFWG), established by the Bank of England last year, had potential to address the UK’s huge gap in delivering investment that develops the productive capacity of the economy, which has persisted since at least the 1920s. But despite attempts to engage from the Finance Innovation Lab and other members of the Transforming Finance Network that Positive Money is part of, membership was restricted to financial institutions and their lobbyists – the same financial institutions that have continually shown no interest in doing anything about the issue. 

Therefore unsurprisingly, what has come from the PFWG so far have been feeble recommendations to “create an environment in which defined contribution (DC) schemes and other investors can benefit from the appropriate long-term opportunities”. The proposals put forward by industry incumbents do not come close to meeting the scale of the challenge, and are in stark contrast to the solutions former Bank of England chief economist Andy Haldane said were needed to address the issue, such as a UK development bank operating on a decentralised basis.

As Positive Money has long-argued, a CBDC has huge potential to help build a better money and banking system. But it will only be a success if the public is willing to adopt it, and this will require building the same trust people have in notes and coins – the only other form of public money available to all of us. Giving the impression that a CBDC is being predominantly shaped by big banks and tech giants with huge vested interests, as the current Engagement Forum membership does, is the opposite way to build that trust. 

We need the CBDC Engagement Forum to be representative of the wider public who are supposed to be the beneficiaries of the new system – particularly those that are currently poorly served by the current money and banking system, such as the elderly, people of colour and those on low incomes. Age UK, Toynbee Hall and the Runnymede Trust are just a few that come to mind of the many crucial organisations representing such groups against the challenges they face when it comes to finance, and who don’t appear on the Bank of England’s Engagement Forum. 

With private sector lobbyists vying for control of our payments system, it’s more important than ever that members of the public stay informed and engaged on this issue. You can check out this blog post to find out how, if designed well, a CBDC could transform our economy for the better.