Digital Currencies: The Bank of England Hesitates

The decision on a digital central bank currency for the United Kingdom is still pending. It will take at least two more years before the Bank of England makes a decision. This further pushes the timeline of the ambitious project into the future. The vision of a digital currency was launched in 2021 by former Prime Minister Rishi Sunak when he was still serving as Chancellor of the Exchequer. However, since then the Bank of England and the current government have been hesitant, primarily due to privacy concerns raised in a public consultation. Bank Governor Andrew Bailey already expressed his skepticism regarding a digital central bank currency in October. Nevertheless, he emphasized the potential necessity if British banks fail to offer appealing payment options compared to less regulated tech companies. Currently, the bank is working with the UK Treasury on a potential design for the digital currency, based on plans from an earlier consultation. After completing the design phase and considering developments in the payment market, the bank and government will decide on further needs and direction. The earliest a decision is expected is 2025. The UK government emphasizes that while a digital pound would be private, it would not be anonymous, unlike cash. This is intended to allow authorities to monitor suspicious transactions. The planned legal framework is nevertheless intended to ensure user privacy by preventing both the bank and the government from having access to personal information or controlling how citizens and businesses use their money.