Bank of England finally considering the launch of the digital pound

The Bank of England has taken further steps to launch a central bank digital Pounds.

According to a consultation paper released by HM Treasury and the Bank of England, a digital pound is likely needed. The Bank of England is ready to go through several development and research stages to ensure this works out.

The public is summoned to express their perceptions on the topic before it is further explored.

As stated in the report seen on The Bank of England website, the consultation is being launched because both HM Treasury and the Bank want to ensure the public has access to safe money that is convenient to use as our everyday lives become more digital while also supporting private sector innovation, choice, and efficiency in digital payments.

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Chancellor of Exchequer, Jeremy Hunt, said:

“While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible, and easy to use. That’s why we want to investigate what is possible first, whilst always ensuring financial stability.”

Governor of the Bank of England, Andrew Bailey, said:

“As the world around us and the way we pay for things becomes more digitalized, 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 of implications that 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.”

More details on the Bank of England’s plan to launch the digital pound

A digital pound would replicate the role of cash in a digital world. In fulfilling this role, it would be risk-free, highly trusted, and accessible. It would be in the form of pounds.

For legal purposes and security assurance, it will be issued by the Bank of England while subjected to stern privacy and data protection standards. Interestingly, neither the government nor the bank would have access to personal data, and holders would have the same level of privacy as a bank account.

The digital pound will only be accessible via digital wallets provided to consumers by the private sector through smartphones or smart cards. In addition, it is proposed for payments—digital, in-store, and to friends and family—rather than savings, with no interest paid on holdings.

Countries like the US and China are considering a similar proposal. Significantly, because the digital pound is issued by the Bank of England and not the private sector, it commands an intrinsic value and is not volatile like cryptocurrencies. The Bank of England will serve as its central authority.

The Bank of England stated in a post on its website that “the needs of vulnerable people are being considered in the digital pound’s design process, ensuring that it will be simple and straightforward to use and understood and trusted by the public as a form of money.”

A decision about implementing a digital pound will be taken around the middle of the decade and will largely be based on future developments in money and payments. “The earliest stage at which the digital pound could be launched would be the second half of the decade.”

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