The Bank of England and UK Treasury have launched a consultation on the design of the proposed digital pound and could roll out the central bank digital currency (CBDC) during the second half of the decade, according to bank and government officials.
“There are a number of implications which our technical work will need to carefully consider,” Bank of England governor Andrew Bailey said in a statement.
“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.”
No decision to launch a digital pound has yet been taken but the officials said “a central bank digital currency was likely to be needed later this decade” and could “help prevent the fragmentation of an electronic cash system dominated by tech or banking giants”, according to a Reuters report.
“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,” the UK Chancellor Jeremy Hunt explained.
“That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”
The Bank of England formed a CBDC task force to explore digital currency options with the UK Treasury in April 2021, laid out its core principles for a digital pound in June the same year and issued a tender inviting suppliers to produce a proof of concept CBDC wallet in December 2022.
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