The Bank of England (BoE) and HM Treasury have released a consultation document indicating the future need for a digital pound. The Bank of England will serve as the issuer of the digital pound, which can be used for both offline and online payments by individuals and businesses.
HM Treasury and the BoE are launching the consultation to foster private sector innovation, choice, and efficiency in digital payments while ensuring that the public has access to secure funds that are convenient to use as their daily lives grow increasingly digital.
According to the Bank of England, the digital pound would serve the same purpose as cash in the digital world, replicating its risk-free, highly trusted, and accessible qualities. It would also be held to strict privacy and data protection standards, ensuring that neither the government nor the bank would have access to the holders’ personal information and that they would enjoy the same level of privacy as bank accounts.
According to Jeremy Hunt, Chancellor of Exchequer,
“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. That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”
The private sector would provide consumers with digital wallets that they could use with their smartphones or smartcards to access the digital pound. With these wallets, people can easily maintain their balance and make payments. The Bank of England claims that the wallets would function and leverage merchant infrastructure like present contactless payments do today.
Governor of the Bank of England, Andrew Bailey, stated:
“As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow. A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.”
However, Bailey also noted that there are numerous issues that require careful evaluation through technical work, and the consultation and subsequent work by the Bank of England will serve as the foundation for a significant choice for the nation’s use of money.
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