Digital Pound

Stewart Hosie Excerpts

Tuesday 7th February 2023 Commons Chamber

[Andrew Griffith]

I thank my hon. Friend for her, as ever, wise points, as well as her wise chairmanship of the Treasury Committee. It is absolutely imperative that savers get the interest rates that they are entitled to. I commend my colleagues in National Savings and Investments, who have significantly increased the rates offered to savers. Of course, she also raises one potential opportunity, in that, although a digital pound would sit alongside our existing financial services infrastructure, it potentially offers consumers and citizens a different choice, which could involve the ability to hold currency through intermediaries other than the current banks.

[Stewart Hosie (Dundee East) (SNP)]

When I was in the US with the Treasury Committee some years ago, we were given two choices: either 95% of all crypto was fraud and froth, or 100% of all crypto was fraud and froth. Clearly, a central bank-backed asset is a different beast; but nevertheless, I have three questions. First, what problem is this idea designed to solve? Secondly, what happens if this digital asset becomes volatile? If it stops behaving like a currency and starts to behave like a bond or equity, or debt, or something speculative like a non-fungible token, how will it be regulated? Thirdly, the Minister said the digital pound, in this new form, will always be worth the same as a traditional pound. What if the market determines that that is not true and there is a divergence between the fiat currency value and this new non-fungible, Bank-backed token? Who picks up the tab when people potentially start to lose money?

[Andrew Griffith]

The right hon. Gentleman runs the risk, if I may say so, of confusing a particular attribute of what is a very large sector. This is not a cryptoasset; the digital pound would not have those speculative attributes. The fact that £10 in digital pounds would be fully exchangeable for £10 in His Majesty’s finest banknotes would prevent that divergence—if it did not, that would present the right hon. Gentleman with a profitable opportunity that he could use to supplement his other activities. He raises other questions, which are rightly the subject of the consultation. I extend the invitation to all parts of the United Kingdom, and we look forward to his constituents and compatriots being able to contribute.