Summary
The Bank of England and UK Treasury are proceeding with plans for a potential digital pound, but this does not mean that a central bank digital currency (CBDC) will be implemented. The government will continue to examine how a digital pound would interact with consumers and the economy. Further public consultation and legislation to protect user privacy would be sought before any launch. The digital pound would provide more payment options and one digital pound would be equivalent to one actual pound. The Financial Conduct Authority is developing a regulatory framework to protect cash. Limits would be set on how much individuals and businesses could hold. Consumers could use the digital pound for purchases and access it through a wallet offered by the private sector. The Bank of England believes there is increasing demand for a digital currency but also recognizes potential risks to financial stability. The UK has been researching a CBDC for the past few years.
Key Points
1. The Bank of England and the UK Treasury are in the planning process for a potential digital pound, but this does not mean that the UK will immediately implement a central bank digital currency (CBDC). Further examination of how a digital pound would interact with consumers and the UK economy is necessary.
2. Before launching a digital pound, the Bank of England and the UK Treasury would seek public consultation and introduce legislation to protect user privacy.
3. The digital pound, also known as Britcoin, would provide people with more options for everyday payments. The CBDC would have an equivalent value to the actual pound, and consumers could use it to make purchases through wallets offered by the private sector.