The Bank of England and the U.K. Treasury are cautiously advancing the exploration of a digital pound, focusing on research and legislative groundwork without a firm commitment to launch.
The Bank of England (BoE) and the U.K. Treasury, in their latest response to a consultation on a proposed digital pound, have emphasized a cautious and exploratory approach towards developing a central bank digital currency (CBDC).
The response, addressing a consultation paper from February 2023, indicates a continued interest in the potential of a digital pound yet stops short of a definitive commitment.
Central to the BoE and Treasury’s stance is the acknowledgment that it’s premature to conclusively decide on the necessity of a CBDC in the United Kingdom. The governing bodies intend to continue research and design efforts, highlighting that such work is crucial to keep pace with evolving payment landscapes and minimize lead times, should a decision to launch a digital pound be made.
A noteworthy aspect of the response is the exploration of both retail and wholesale models for the CBDC. The earliest potential launch is projected to be no sooner than 2025. The BoE and Treasury have also addressed privacy and trust concerns, asserting that new legislation will be introduced to protect users’ data and privacy before any launch.
“Trust in all forms of money is an absolute necessity. We know the decision on whether or not to introduce a digital pound in the UK will be a major one for the future of money. It is essential that we build that trust and have the support of the public and businesses who would be using it if introduced,”
Deputy Governor for Financial Stability at the BoE, Sarah Breeden
The response also reassures that traditional forms of money, like banknotes and coins, will continue to be available, with the digital pound offering an additional option rather than a replacement.
The consultation attracted over 50,000 responses, reflecting public and business interest in the societal implications of a retail CBDC, such as the future of cash and users’ rights.
The BoE and Treasury’s response to the consultation, titled “The Digital Pound: A New Form of Money for Households and Businesses” outlines the plan to act upon the findings, positioning the U.K. at the forefront of digital currency exploration while maintaining a cautious and informed approach.