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Digital pound CBDC won’t be programmable to avoid government control perceptions
April 03, 2023
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Last week, Katie Fortune, senior manager of the central bank digital currency (CBDC) unit at the Bank of England (BofE), suggested that the digital pound will not include government-enabled programmability functions to avoid misperceptions about government overreach. Ms. Fortune was speaking at Citibank’s 10th Annual Digital Money Symposium. 

The issue of programmability is a sensitive one in CBDC discussions. The usual argument is that because any government-issued digital currency would be a de facto legal tender – therefore, anyone would have to accept it – CBDCs should be simple, standardized, and not restricted. However, programmability functions could limit usability and impose rules on how people are allowed to spend their money. The BofE believes that if these functions were introduced by design, they could feed people’s misperceptions and reduce trust in the system.

“What we can’t have with public money is some sense that I might decide you are not allowed to spend that on what you want to spend it on, because the government doesn’t approve of what you’re doing,” said Ms. Fortune.

Like the digital euro, the digital pound would not be programmable at its core but programmability can still be implemented by the private sector. A two-tier model with a private sector layer in the middle could build on the BofE’s infrastructure, Ms Fortune argued. This way, it would be private firms that deal with end users. This would allow the BofE to support innovation while maintaining independence.

Ms. Fortune also referred to CBDCs as a potential “bridging asset” between different forms of money. Responding to a question on how CBDCs would interact with things like Bitcoin and stablecoins, she reflected on today’s mixed ecosystem. 

“What we have today is that I have a Santander account, and I can go to a cash machine and take out the same cash that my friend with a Barclays account takes out. It’s a sort of bridging asset between them.”

Ms Fortune believes that CBDCs can become a powerful tool in a world of stablecoins and other digital forms of money, particularly due to the risk of fragmentation. She argued that the goal should be for money to have the same level of uniformity as electricity, which has effectively become a neutral public good. 

Lastly, Ms. Fortune briefly touched on privacy and fraud prevention tradeoffs. She noted that illicit transactions, identity theft, and other fraudulent activities are important concerns for individuals, but preventing these crimes requires a degree of involvement and identification that will have to be different than with physical cash payments

CBDCs will not be “anonymous money”, Ms. Fortune said. “However, the objective is that the central bank and the government would not be able to access that information. That would be done by this private sector layer.”

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The Great Onboarding: US Government Anchors Global Economy into Web3 via Pyth Network

For years, the crypto world speculated that the next major cycle would be driven by institutional adoption, with Wall Street finally legitimizing Bitcoin through vehicles like ETFs. While that prediction has indeed materialized, a recent development signifies a far more profound integration of Web3 into the global economic fabric, moving beyond mere financial products to the very infrastructure of data itself. The U.S. government has taken a monumental step, cementing Web3's role as a foundational layer for modern data distribution. This door, once opened, is poised to remain so indefinitely.

The U.S. Department of Commerce has officially partnered with leading blockchain oracle providers, Pyth Network and Chainlink, to distribute critical official economic data directly on-chain. This initiative marks a historic shift, bringing immutable, transparent, and auditable data from the federal government itself onto decentralized networks. This is not just a technological upgrade; it's a strategic move to enhance data accuracy, transparency, and accessibility for a global audience.

Specifically, Pyth Network has been selected to publish Gross Domestic Product (GDP) data, starting with quarterly releases going back five years, with plans to expand to a broader range of economic datasets. Chainlink, the other key partner, will provide data feeds from the Bureau of Economic Analysis (BEA), including Real Gross Domestic Product (GDP) and the Personal Consumption Expenditures (PCE) Price Index. This crucial economic information will be made available across a multitude of blockchain networks, including major ecosystems like Ethereum, Avalanche, Base, Bitcoin, Solana, Tron, Stellar, Arbitrum One, Polygon PoS, and Optimism.

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US Dept of Commerce to publish GDP data on blockchain

On Tuesday during a televised White House cabinet meeting, Commerce Secretary Howard Lutnick announced the intention to publish GDP statistics on blockchains. Today Chainlink and Pyth said they were selected as the decentralized oracles to distribute the data.

Lutnick said, “The Department of Commerce is going to start issuing its statistics on the blockchain because you are the crypto President. And we are going to put out GDP on the blockchain, so people can use the blockchain for data distribution. And then we’re going to make that available to the entire government. So, all of you can do it. We’re just ironing out all the details.”

The data includes Real GDP and the PCE Price Index, which reflects changes in the prices of domestic consumer goods and services. The statistics are released monthly and quarterly. The biggest initial use will likely be by on-chain prediction markets. But as more data comes online, such as broader inflation data or interest rates from the Federal Reserve, it could be used to automate various financial instruments. Apart from using the data in smart contracts, sources of tamperproof data 👉will become increasingly important for generative AI.

While it would be possible to procure the data from third parties, it is always ideal to get it from the source to ensure its accuracy. Getting data directly from government sources makes it tamperproof, provided the original data feed has not been manipulated before it reaches the oracle.

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