According to Finance Minister Jeremy Hunt, the digital pound, or “Bitcoin,” would be created and supported by the Bank of England, but it would not replace currency.
The Bank of England (BoE) and the United Kingdom Treasury are developing ideas for a digital currency that will “offer a new method to pay” without necessarily replacing cash.
A joint consultation paper on Central Bank Digital Currencies (CBDCs) will be released on February 7, with the BoE and Treasury requesting views on how and whether they should develop a CBDC.
Finance Minister Jeremy Hunt stated in a public announcement on February 6 that the two groups will work together to build a modernized digital payments system that does not necessarily eliminate the usage of cash.
“While currency is here to stay,” he said, “a digital pound issued and supported by the Bank of England may be a new method to pay that’s trustworthy, accessible, and simple to use.” But, he added, “we want to study what is feasible first while always ensuring we maintain financial stability.”
Another priority will be to give a government-backed alternative to privately produced stablecoins, with officials from the Bank of England and the Treasury anticipating large tech companies to establish one in the coming years.
BOE Governor Andrew Bailey stressed in the statement that a “digital pound would give a new method to pay, support companies, retain faith in money, and better ensure 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.”
Deputy Governor Jon Cunliffe of the Bank of England is also scheduled to deliver a lecture on February 7 to inform the financial industry on the bank and Treasury’s CBDC work thus far.
If they decide to proceed, the Digital Pound and its underlying blockchain-based infrastructure will not be constructed until at least 2025.
Rishi Sunak, the current Prime Minister and former Finance Minister instructed the BoE and Treasury to collaborate and create the Central Bank Digital Currency Taskforce in April 2021. Essentially, the pair is in charge of managing the Digital Pound’s research and future deployments.
While it looks to be a slow burn thus far, given the bank’s and Treasury’s cautious postures, the latter did publish a job advertisement on LinkedIn on January 24 seeking team leads for its Payments and Fintech Team of around 20 employees focusing on researching a “possible digital pound.”