On 7 February 2023, the Bank of England (BoE) published a speech by Sir Jon Cunliffe (Deputy Governor, Financial Stability), given at UK Finance, on the digital pound.
The speech begins by setting out the headline conclusions from the recent report from the BoE – HM Treasury Taskforce on the introduction in the UK of a central bank digital currency:
- On current trends, it is likely that a retail, general purpose digital central bank currency – a digital pound – will be needed in the UK.
- We are not yet at a point where a firm decision can be made to implement a digital pound.
- Given the likely need for the digital pound and the lead time to introduce it, the BoE and HM Treasury will now proceed to the next stage of detailed policy and technical development – including the development of a technical blueprint. This stage will take around two to three years following which a decision will be made whether or not to proceed to the next stage and implement a digital pound in the UK.
- The digital pound would not be the same as a cryptoasset – it would be a safe, trusted form of money accepted for everyday transactions by households and firms.
The speech goes on to state that:
- The Taskforce’s view that a digital pound is likely to be needed is grounded in the view that a further decline in cash use and further development in the digitisation of money and payments is likely. Also, these developments raise important questions to which the BoE and the Government should respond.
- The BoE has made it clear that cash will remain available to any and all that want to use it and the Government is taking powers under the Financial Services and Markets Bill to give the BoE and the FCA new powers to ensure the future effectiveness, resilience and sustainability of the cash ecosystem.
- If designed appropriately, a digital pound could complement and support new forms of private digital money and payment services, for example by acting as the ‘bridging asset’ between different platforms enabling convertibility. By establishing technical standards available to all, it could help ensure interoperability between different platforms. The Taskforce’s assessment is that a digital pound, as an alternative, publicly issued form of digital money, available to all, would help ensure competition and innovation and drive efficiency in payments.