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Bank of England undecided on digital pound amid privacy concerns

digital pound London, UK.  18 April 2023. People pass the Bank of England in the City of London.  The Office for National Statistics (ONS) has reported that average earnings excluding bonuses rose 6.6% in the three months through February compared with a year ago.  Economists have commented that the Bank of England could raise interest rates from the current level of 4.25% when its monetary policy committee next meets on 11 May to combat inflation. Credit: Stephen Chung / Alamy Live News
Decision on digital pound by the Bank of England will not happen until 2025, at the earliest. (Stephen Chung)

The Bank of England has said it is too early to decide whether to introduce a digital pound currency dubbed Britcoin with 2025 being the earliest for a decision.

The Bank of England and the finance ministry said they would launch further consultations, effectively putting the plan for Britcoin on hold.

“No final decision has been made to pursue a digital pound – also called a central bank digital currency (CBDC).

“Work will continue during the design phase exploring its feasibility and potential design choices,” the BoE said in a statement.

The digital pound is a form of central bank digital currency (CBDC). Unlike existing digital payments, a CBDC is created by the central bank.

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Read more: Turning assets into tokens on blockchain is $15tn market, says analyst

The two institutions said any decision to go ahead with a new digital currency would be taken around the middle of the decade at the earliest.

Privacy worries relating to a possible digital version of the pound would be addressed by new legislation.

"To address these concerns, the publication confirmed that primary legislation would be introduced before the launch of any digital pound," the BoE and the Treasury said.

Policymakers said a digital pound issued by the Bank of England “would not replace those existing forms of money – cash and the money in our bank accounts – and the means of payments we already use, like debit and credit cards”.

To address concerns that banks will lose access to deposits, officials at the Treasury and the BoE have proposed a temporary limit on holdings of between £10,000 and £20,000.

Deputy governor Sarah Breeden said: “Trust in all forms of money is an absolute necessity.

Read more: UK faces challenges in nurturing tech startups like OpenAI, says government advisor

“We know the decision on whether or not to introduce a digital pound in the UK will be a major one for the future of money.

“It is essential that we build that trust and have the support of the public and businesses who would be using it if introduced.”

Meanwhile, City minister Bim Afolami, said the UK needs to attract young crypto investors.

Speaking at a Bloomberg conference, he said: “About 6 million people in this country hold crypto assets of some description.

“Those people are not people who don’t want to invest. The question is why is it they’re not doing it in the mainstream financial markets?

“I’m not saying they shouldn’t do it in crypto assets.

“If we make the mainstream capital markets attractive for them, that will help the flow of capital into our capital markets but critically it will help ownership particularly among younger people.

“Let’s try and get them into the mainstream financial markets.”

Watch: How digital pound could benefit the UK | The Crypto Mile

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