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 1. Home
 2. The digital pound


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.


 * RELATED LINKS RELATED LINKS
   
    * Digital pound news


IN THIS SECTION

 * CBDC Academic Advisory Group
 * CBDC Engagement Forum
 * CBDC Technology Forum
 * Digital pound working groups
 * What is CBDC?
 * What is the digital pound?
 * Digital pound news


ON THIS PAGE

 * We're looking at the case for a digital pound
 * The next steps for a digital pound
 * Your questions answered
 * Sign up to receive updates about the digital pound




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.


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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


 * WHY IS THE BANK OF ENGLAND LOOKING INTO THE DIGITAL POUND?
   
   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.


 * WILL THE BANK OF ENGLAND INTRODUCE THE DIGITAL POUND?
   
   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.


 * WOULD THE DIGITAL POUND REPLACE PHYSICAL MONEY?
   
   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.


 * WOULD I HAVE A DIGITAL POUND ACCOUNT AT THE BANK OF ENGLAND?
   
   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.


 * WHAT WOULD I BE ABLE TO USE MY DIGITAL POUNDS FOR?
   
   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.


 * WOULD DIGITAL POUNDS BE USED TO MONITOR WHAT I DO WITH MY MONEY?
   
   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.


 * WOULD THE BANK OF ENGLAND RESTRICT WHAT I USE MY DIGITAL POUNDS FOR?
   
   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.


 * WOULD THE DIGITAL POUND BE SAFE AND SECURE?
   
   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.


 * WOULD I EARN INTEREST ON MY DIGITAL POUNDS?
   
   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.


 * WOULD THE DIGITAL POUND BE JUST ANOTHER CRYPTOCURRENCY?
   
   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.


 * WOULD THE DIGITAL POUND BE BAD FOR THE ENVIRONMENT?
   
   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.


 * WOULD THE DIGITAL POUND ONLY BE FOR PEOPLE WHO ARE COMFORTABLE WITH
   TECHNOLOGY?
   
   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.


 * WHY DO WE NEED A LIMIT FOR HOW MANY DIGITAL POUNDS I CAN HOLD?
   
   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.


 * WILL THE GOVERNMENT OR THE BANK BE ABLE TO CONTROL OR MONITOR MY DIGITAL
   POUNDS?
   
   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.


 * WILL THERE BE A VOTE ON A DIGITAL POUND, AND WILL I GET A SAY?
   
   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




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