The Bank of England (BoE) and the Treasury launched a formal consultation to develop a central bank digital currency (CBDC) for the UK. According to the Treasury and BoE, Digital Pound is likely to be launched later this decade.
Digital Pound will be a new form of sterling issued by the Bank of England. It will be used for everyday payments alongside cash and bank deposits. The consultation paper is overseen by HM Treasury and CBDC Taskforce, which was announced in April 2021.
Chancellor Jeremy Hunt said that CBDC could be “a new way to pay that’s trusted, accessible and easy to use.” The earliest stage at which the digital pound could be launched would be the second half of the decade.
Cryptocurrencies are highly volatile as they are not backed by any national bank. However, CBDCs are backed by national banks so it will be less volatile. Ten digital pounds will constantly merit equivalent to £10 in real money, the Treasury says.
The public are being invited to give their views on the consultation to be taken forward. The consultation is open for comments until 7 June 2023.
A Technical Working Paper has also been published alongside the Consultation Paper. It focuses on the technical requirements and design considerations for the digital pound. It summarizes a series of design principles relating to privacy, performance, security, resilience, extensibility, and energy usage that will be applicable to the digital pound.
Also Read: CBDC: A New and Secure Central Backed Digital Currency
