The Treasury and the Bank of England have started consultations on a potential digital pound, or central bank digital currency (CBDC), that could be used by households and businesses instead of cash for everyday payments in-store and online.
Chancellor Jeremy Hunt said, “We want to investigate what is possible first, whilst always making sure we protect financial stability.” He added that CBDC could be a new “trusted and accessible” way to pay. No decision has been taken at this stage when to introduce CBDC and it is unlikely to be built until at least 2025.
Governor of the Bank of England, Andrew Bailey, said:
“As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow. A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.”
“However, there are a number implications which our technical work will need to carefully consider. This consultation and the further work the Bank will now do will be the foundation for what would be a profound decision for the country on the way we use money.”
What would a digital pound look like?
- It would replicate the role of cash in a digital world, so that it is risk-free, highly trusted and accessible
- £10 of a digital pound would always be worth the same as £10 of cash
- Issued by the Bank of England, widely available and convenient to use
- Subject to rigorous standards of privacy and data protection – neither Government nor the Bank would have access to personal data and holders would have the same level of privacy as a bank account
- Accessed through digital wallets offered to consumers by the private sector through smartphones or smartcards
- Intended for payments, online, in-store, and to friends and family, rather than savings, with no interest paid on holdings
Bank of England 2023
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