The Future of Money UK

The problem

No matter who we are or where we are from we all need to access money to buy food, pay our rent or mortgage, and make payments. Money, and the ability to access it and make payments, is a fundamental public good that we all rely on, similar to water and electricity.

But right now we rely on private banks to run our payments system. And this is a problem, because if any one of the big banks crashes they can pull the whole payment system down, and the economy grinds to a halt.

The main type of money we use is privately-issued bank deposits. In the UK, this money is almost all concentrated on the balance sheets of 5 big banks that control around 85% of the market share. This essentially gives the banks a lot of economic power, and makes them ‘too big to fail’.

Physical cash, as a public form of money, offers an inclusive way for anyone, no matter who they are, to make payments freely. But the decline of cash risks millions of people being excluded from being able to make payments and therefore participate in the economy. It also gives banks more power and money, because we’ll increasingly rely on them to make payments without a public alternative in the form of cash. This will ensure they remain ‘too big to fail’ and strengthen their power to control and shape our economy.

What we need now

Rather than leaving private banks to decide the future of money, Positive Money believes we should build a strong public money system, where the future of cash is protected, and we introduce a publicly-issued form of digital money, with the same privacy, independence, and benefits of cash. This would mean we could separate the public good of money and the payments system, from private banks’ reckless risk-taking, and provide the building blocks for a more inclusive, equitable, stable, democratic, and prosperous economy.

We may be on the brink of transformation to our money system, with various new forms of digital money appearing that could outcompete bank deposits as a means of payment. On the one hand, private corporations are developing so-called ‘stablecoins’, such as Facebook’s Libra project. And on the other hand, public institutions like the Bank of England are exploring central bank digital currency (CBDC), which could mean a digital pound being introduced by the end of the decade.

We believe the development of central bank digital currencies is a crucial opportunity to reshape a fairer and more stable money and payment systems. We need to work together to stop the future of money being decided by private interests, and seize the opportunity to take back control of our financial system with publicly-issued digital money.

Milestones so far

• Positive Money is pleased to have joined the Treasury and Bank of England’s CBDC Engagement Forum and offline payments working group, in which we are advocating for a digital currency that replicates the key benefits of physical cash

• We mobilised thousands of members of the public to respond to Treasury and Bank of England consultations on the digital pound, calling for it to be designed in a way which benefits the public rather than private interests

• We have shaped the Bank of England’s development of a digital pound with our thought leadership, such as our original ‘Digital Cash’ report in 2016