On 7 January 2023, HM Treasury and the Bank of England (BoE) published a joint Consultation Paper on the digital pound: a new form of money for households and businesses?


In this consultation HM Treasury and the BoE are consulting on a proposal for a retail UK central bank digital currency (CBDC). A UK CBDC – or ‘digital pound’ – would be a new form of digital money for use by households and businesses for their everyday payment needs. As part of the wider landscape of money and payments it would sit alongside, not replace, cash, as a digital counterpart to familiar, trusted bank notes and coins. Unlike cryptoassets and stablecoins, the digital pound would be issued by the BoE and not the private sector. 

The BoE and HM Treasury judge that it is likely a digital pound will be needed in the future and that, whilst it is too early to commit to building the infrastructure, further preparatory work is justified. They note that the case for introducing the digital pound will depend to a significant degree on how the payments landscape evolves in the coming years.

The consultation seeks feedback on the policy and technical work undertaken so far, in order to inform a future decision on whether or not to progress to building and launching a digital pound, as well as on the current proposals for its form and functions.

The consultation does not cover a wholesale CBDC, which would be used to settle high-value payments between financial firms. The concept of a wholesale CBDC is discussed in a box in Part D of the consultation, alongside the BoE’s work with industry to enhance wholesale payments through Real-time Gross Settlement (RTGS) renewal and the RTGS future roadmap.


The consultation proposes the following:

  • If introduced, the digital pound would replicate the role of cash in a digital world, so that it is risk-free, highly trusted and accessible.
  • £10 of a digital pound would always be worth the same as £10 in cash.
  • The digital pound would be accessed through digital wallets offered to consumers by the private sector through smartphones or smartcards.
  • The BoE would provide the central public infrastructure in the form of a ‘core ledger’ – a fast, resilient and highly secure technology platform, which would provide the minimum necessary functionality for the digital pound. Regulated private firms could then access this infrastructure, design innovative services using the digital pound, and handle all user-facing interactions.
  • A digital pound would be subject to rigorous standards of privacy and data protection. Like current digital payments and bank accounts, the digital pound would not be anonymous because the ability to identify and verify users is necessary to prevent financial crime.
  • A limit on individuals’ holdings would apply at least in the introductory phase. This would strike a balance between both encouraging use and managing risks, such as the potential for large and rapid outflows from banking deposits into digital pounds. These limits could be amended in the future.

Next steps

The deadline for comments to the consultation is 7 June 2023. Work will now move onto a ‘design phase’ which will look at the technology and policy requirements for a digital pound, to ensure that its development can be accelerated if a decision is taken to build it.

Responses to the consultation will inform the next stage of work and constitute an important step towards making a final decision on whether to build a digital pound.