Thought forum members might be interested in this Bank of England consultation on proposed digitalisation of GBP
Foreword
The way we use money in the United Kingdom is changing, bringing fresh opportunities and
new considerations for public policy.
Banknotes, issued by the Bank of England, are being used less frequently by households
and businesses. New technologies are allowing for the emergence of new forms of digital
money, and new ways and devices to pay with it. International developments have the
potential to affect the UK domestically and as a global leader in finance.
Ensuring that public trust in money remains high, and that our modern forms of money and
payments meet the evolving needs of individuals and businesses, are fundamental
responsibilities of the Government and the Bank of England. We are determined that the UK
should remain at the forefront of innovation in money, payments and financial services. This
is part of the Government’s vision for a technologically advanced, sustainable, and open
financial services sector that is globally competitive and acts in the interests of communities
and citizens, creating jobs, supporting businesses, and powering growth across all four
nations of the UK.
A UK central bank digital currency – a ‘digital pound’ – would be a new form of digital money
for use by households and businesses for their everyday payments needs. As part of the
wider landscape of money and payments it would sit alongside, not replace, cash – a digital
counterpart to familiar, trusted banknotes and coins, subject to rigorous standards of privacy
and data protection. A digital pound would help to ensure that central bank money remains
available and useful in an ever more digital economy, continuing to bolster UK monetary and
financial stability while safeguarding the UK’s monetary sovereignty in a changing global
financial system. It could provide a platform for private sector innovation, promoting further
choice, competition, efficiency and innovation in payments. It could also have further benefits
for the resilience and functionality of payments in the UK.
On the basis of our work to date, the Bank of England and HM Treasury judge that it is likely
a digital pound will be needed in the future. It is too early to commit to build the infrastructure
for one, but we are convinced that further preparatory work is justified.
Any future digital pound would be a major piece of national infrastructure which would likely
take several years to complete. Its launch would require deep public trust in this new form of
money – trust that their money would remain safe, accessible, and private. The journey
towards issuing any digital pound therefore necessarily involves an open, national
conversation about the future of our money, in parallel with detailed technical consideration
by experts across the UK public authorities, and informed by evolving market trends.
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This consultation – issued jointly by HM Treasury and the Bank of England – opens that
conversation and seeks to begin to build that foundation of public trust. It seeks feedback on
the policy and technical work undertaken so far in order to inform a future decision on
whether or not to progress to building and launching a digital pound and on our current
proposal for its form and functions which will be taken forward in the next stage. It commits
us to progressing the next stage of technical and policy work needed to underpin such a
decision. This paper is being issued alongside a Technology Working Paper from the Bank
of England, exploring the many technology challenges involved in a digital pound.
In the coming four-month consultation period, HM Treasury and the Bank of England will
engage extensively across the UK to seek views on a potential digital pound. Responses to
the consultation are invited from all interested members of the public, experts, and the widest
range of organisations.
At this exciting time of change in money and payments, this consultation is a vital step
in positioning the UK to act decisively by introducing a digital pound, should we
choose to do so.
Rt Hon Jeremy Hunt MP, Chancellor of the Exchequer