Summary
The Bank of England and UK Treasury have responded to a consultation paper on a digital pound, stating that it is too early to decide if a digital pound is necessary. However, they will continue their research and design efforts for a central bank digital currency (CBDC). The design phase will explore the feasibility of a retail and wholesale CBDC, with a potential launch no earlier than 2025. Privacy and trust concerns will be addressed through new legislation, and personal data would not be accessible to the BoE or Treasury. A digital pound would not replace cash but provide more payment options. The response outlined the plan to act upon the findings of the original consultation paper.
Key Points
1. The Bank of England and UK Treasury have determined that it is still too early to decide if a digital pound is necessary, but they will continue their research and design efforts for a central bank digital currency (CBDC). They believe further preparatory work is justified to respond to developments in the payments landscape and reduce the lead time for introducing a digital pound.
2. The design phase for the digital pound will explore the feasibility of having both a retail and a wholesale CBDC. The potential launch of a digital pound is not expected before 2025. Privacy and trust concerns related to a digital pound will be addressed through new legislation, and neither the Bank of England nor the UK Treasury will have access to users’ personal data if a retail CBDC is launched.
3. A digital pound is intended to ensure that central bank money remains available and useful in a digital economy while promoting competition, efficiency, and choice in payments. However, a digital pound will not replace cash, and banknotes and coins will continue to be provided for those who prefer to use them.