The Bank of England (BoE) and HM Treasury launched a consultation in February last year to explore the proposal for a digital pound, or UK retail central bank digital currency (rCBDC). Now, the two organisations have published a response to the feedback received during the consultation, of which there were more than 50,000. No commitment has been made to introduce a digital pound, but preparatory work will continue, as it is likely to “present enduring benefits for the digital economy in the UK”.
Although no decision has been made at this point to introduce a digital pound, HM Treasury and BoE have “judged it likely that a digital pound would be needed in the future”. The consultation paper explained that “if current trends in payments continue, a digital pound could be a ’solution’ to two ’problems’: first, risks to the ’uniformity’ or ’singleness’ of money, and second, risks to competition in payments”. Continued work in the study of its design is thus valuable.
The main concerns brought up by the respondents to the consultation paper centred around the future of cash, and the privacy and rights of the users of the digital pound. In response, HM Treasury and BoE confirmed that “measures would be put in place to ensure the public would have confidence in using a digital pound”.
The digital pound would only be launched after primary legislation has been introduced, which means that both houses of parliament must pass the relevant legislation. Privacy would be a core design feature of the rCBDC – legislation would guarantee that the bank and the government would not access users’ personal data. In addition, the BoE has committed to “exploring technological options that would prevent the bank from accessing any personal data through the bank’s core infrastructure”. Finally, the government has legislated to safeguard access to cash so that it remains available even if a digital pound were launched.