TallyMoney chief executive Cameron Parry is urging British savers to take advantage of alternatives to traditional banking

The founder of a gold-based money app has claimed the pound is "structurally flawed" and that savers are bearing the cost of a banking system "designed to protect and benefit the banks".

Cameron Parry founder and chief executive of TallyMoney, told the inaugural UK CPAC conference last week that the money Britons earn and save is being steadily devalued and that ordinary depositors carry the risks while banks keep the rewards.

During the conference's "New Money: The Bitcoin and Alternative Money Revolution" panel, Mr Parry explained: "It [the system] sucks that the value of the money that we use, and we've used all our lives, is being devalued.

"The more you earn, the more you know it's being devalued on the way through. It certainly doesn't promote saving and responsible things like that."

Mr Parry, whose company offers an everyday account and debit card denominated in milligrams of gold, argued that most people misunderstand what actually happens to their money once it is deposited.

"You think you have the money in your bank, but there's no money there. You're a creditor of the bank if you're a customer of the bank, and in this system, they get to take lots of risks that you bear the exposure to."

He claimed savers are poorly rewarded for lending their money to banks.

"They pay you a pittance in interest, and so they pay you interest because you've lent them your money. Interest is a yield paid on a loan.

"So you've lent them your money. They're off doing risky things, generating lots of profit. But you don't see any of that. You just get this pittance of interest."

Mr Parry also pointed to rules introduced after the financial crisis which allow failing banks to be rescued using creditors' funds, a process known as a "bail-in".

"Since 2012, it's come into law that they can conduct bail-ins. That's where a single institution, a bank, with agreement with the regulator, can actually confiscate part of your deposits, part of your savings from that bank to prop it up. It's just a whole lose-lose situation."

Under the UK's bank resolution regime, bail-in powers apply to failing institutions and are intended as an alternative to taxpayer-funded bailouts.

Deposits of up to £85,000 per person, per banking group are protected by the Financial Services Compensation Scheme and cannot be bailed in. Mr Parry described money as "just a product" and one he believes the state has mismanaged.

"We've got a very structurally flawed product that's run by the state. And so we need to have alternatives to this. Competition delivers better outcomes for consumers.

"You need things like Bitcoin, and you need things like TallyMoney, so that the public have a choice away from this structurally flawed and dangerous thing."

Tally accounts hold customers' funds in physical gold, with balances measured in milligrams rather than pounds. However, gold is not without its own risks: its price can be volatile, meaning balances can fall as well as rise in pound terms, and funds held in gold rather than sterling deposits sit outside the FSCS protection that covers bank savings.

The Bank of England has consistently defended its two per cent inflation target as delivering price stability, and points out that deposit protection and post-crisis capital rules have made the banking system significantly safer for consumers than before 2008.