The digital pound

We are looking at the case for issuing a digital pound. This type of money is known as a central bank digital currency (CBDC). It would not replace cash.

We're looking at the case for a digital pound

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Money sits at the heart of our economy and everyday lives. Today we can pay in many different ways, including using banknotes issued by the Bank of England or electronically, from your bank account. Whichever way you choose to pay, you can always trust the value of the money you’re spending or receiving. 

A digital pound would be like a digital form of cash – a banknote for the digital era.  Like banknotes, it would be issued directly by the Bank of England. You could hold your digital pounds in a digital wallet, and spend them in shops or online.

A digital pound would be denominated in sterling and its value would be stable, just like banknotes. £10 in digital pounds would always have the same value as a £10 banknote.

If we introduced it, it would not replace cash. We know being able to use cash is important for many people. That’s why we will continue to issue it for as long as people want to keep using it. You would simply have even more choice when you make payments.

The digital pound would not be a cryptocurrency or cryptoasset. As opposed to cryptocurrencies, which are issued privately, a digital pound would be issued by the Bank of England and be backed by the Government.

Just like the money you use today, your trust in a digital pound would be essential. Any future laws on a digital pound would guarantee users’ privacy and also guarantee that neither the Bank of England nor the Government would be able to control how you spend your money. It would be your choice whether to use a digital pound or not.

In early 2023, we published a Consultation Paper, which explores the need for a digital pound and proposes a set of design choices for it. We received over 50,000 responses and we are grateful to all those who provided their thoughts. We published a response to this consultation in January 2024. You can find out more about our latest publications on our news page.

The next steps for a digital pound

We haven’t made a decision on whether we will introduce a digital pound. The earliest we would issue a digital pound would be the second half of this decade.

We are now in a design phase which will look at the technology and policy requirements for a digital pound over the next 2 to 3 years. In the design phase we will test how it could work in the real world. This will bring to life innovative ways to use it so you can see how it might be useful and relevant to you. We will also carry out detailed assessments to work out exactly how a digital pound would operate.

At the end of this phase we will have enough information to make a decision on whether to move into a build phase. Parliament will also have a say before any digital pound in launched, and further public consultation will be held to make sure everybody has the opportunity to make your views heard.

Your questions answered

See a video version of the answers

  • We are looking into the digital pound because the way people pay is changing.

    We aren't using cash as much as we used to, and digital payments are becoming more and more common.

    On top of that, new forms of money are emerging and some of these could pose risks to financial stability.

    The digital pound would be like an electronic version of the banknotes issued by the Bank of England.

    We think the digital pound could help us maintain trust in money and protect our financial system, while also improving payments by increasing efficiency and enabling innovation.

  • We haven't made a decision whether to introduce the digital pound. We're still exploring the possibilities. But if we do decide to issue a digital pound, it won't be for a few years.
  • If we introduced the digital pound, it would not replace cash. Instead, we would like it to work alongside cash as we know that people may like to have the option to use both.
  • Not in a traditional sense. So you would not be able to open an account with the Bank of England. The way you would access digital pounds would be through a digital wallet provided by a private company. The reason we would do it this way is that we think private companies are much better placed to provide innovative products and services to the public.
  • If we introduced the digital pound, you would be able to do the same things you can do with your money today, such as paying family or friends or buying goods in shops or online. 

    But new technologies are emerging, which we could incorporate into the design of the digital pound. This would allow wallet providers, from whom you would access the digital pounds, to invent and design tools to help you use your money in new ways. 

    These innovations could change the way people pay and could make payments faster and less expensive. 

    Wallets would be designed by private companies like banks or payment firms and by new firms appearing over time. But digital pounds would be directly issued by the Bank of England, just like banknotes. That means you would have all the same safety and security that you have with our money today.

  • If you used digital pounds, the Bank of England and the government would not collect any of your personal data and wouldn't be able to see how you spent your money. You would access the digital pound through a virtual wallet and you would have to share some personal data with your wallet provider. This is because you would have a commercial relationship with your provider and they would require some form of ID to prevent financial crime or fraud. Your privacy would still be protected by data privacy regulations and your personal data would not be shared with the Bank or the government.
  • Neither the Bank of England nor the government would be able to program your digital pounds or restrict how you spent them. However, you would have the ability to program your own payments, if you wanted to. 

    Today, this would allow you to make automated payments such as paying your rent or mortgage on a set day. But in the future, this feature could also lead to exciting innovations in payments.

  • If we introduced the digital pound, we’d ensure it was protected to the very highest standards from things like cyber attacks or power cuts. 

    Fraud is also a risk people face today when making payments. The authorities and firms providing digital-pound services would have a responsibility to ensure the digital pound helped prevent fraud, as with banknotes. Consumers would enjoy the same protections they have today.

  • You wouldn't earn any interest on your digital pounds, just as you wouldn't earn any interest on your physical cash. A digital pound is designed for day-to-day spending and not for savings.
  • The digital pound would not be a cryptoasset. You may have heard of cryptoassets such as Bitcoin and Ether. These are issued privately, whereas the digital pound would be issued and backed by the Bank of England. The value of cryptoassets can also be very volatile, which means it moves up and down very quickly at short notice, which means these assets are not very useful for making payments. The digital pound, however, would have a stable value over time. That means that £10 of a digital pound would be the same as a £10 banknote.
  • A digital pound wouldn’t be bad for the environment. It would be highly efficient and not use the same energy-intensive methods that you see with the likes of Bitcoin. A digital pound would be in line with the Bank's efforts to reduce its carbon footprint and meet its environmental targets.
  • If we introduced a digital pound, we would like everybody to be able to use it, not just those people who are comfortable with technology. Most people would access their digital pounds through a virtual wallet on their smartphone. But we are also looking at other ways too, for example, a physical card like a debit card.

  • If we introduced a digital pound, we think we would need to set a limit for how much people could hold. This would give us time to understand its possible impact on the financial system and help us ensure it wouldn't cause disruption. 

    Once we better understand this and how people use it, we would review this limit. We've not yet decided what the limit would be, but it would be high enough for day-to-day spending. So you would receive all sorts of payments, such as your salary, without worrying.

  • We know you may be concerned about how private a digital pound would be. And we know some of you worry that if there was a digital pound, the Government or the Bank of England might try to control how you spend your money. 

    To address those concerns, the Government has said it would introduce new laws to make sure your privacy and control would be guaranteed.  

    We are also working on ways to make sure safeguards for your privacy and control are built into the technology of the digital pound, if it goes ahead.

  • There would be a vote in Parliament before any digital pound is launched in the UK. That means your local MP would have a vote on the issue. 

    We started a public conversation on the digital pound in February 2023 by holding an extensive consultation. Tens of thousands of people responded to that, helping us understand how to design a better digital pound for you. And there will be more chances to have your say.

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This page was last updated 03 May 2024