The Bank of England recently announced that it was ending the "consultation and response phase" of the United Kingdom's central bank digital currency plans and was beginning its "design phase".
Here is a screen capture showing the pertinent section of the latest progress update for the Bank of England's CBDC or, as they term it, digital pound:
The Bank claims that the digital pound will complement physical banknotes and that it "could offer households and businesses another way to make and receive payments, in step with an increasingly digital economy." The digital pound would be:
"...seamlessly exchangeable with cash and bank deposits, ensuring the continuity of a trusted, uniform and accessible means of payment. As a publicly provided platform, it could foster innovation by enabling a varied range of private sector firms to develop innovative and user-friendly services."
The Bank has set four outcomes that it desires in the retail payments sector as follows:
"Outcome 1: Singleness of money
a.) the design, operation and supervision of retail payment systems must support confidence in the one-for-one exchange between central bank money and private money – whether commercial bank money or stablecoins. Put another way, all different forms of money must be exchangeable with each other at par value and at all times.
Outcome 2: Innovation
a.) The retail payments ecosystem and the regulatory environment must support safe and sustainable innovation in payments, consistent with the UK retaining its place within a competitive global financial system while also reducing the potential for disruption.
b.) Retail payment methods must be responsive to consumer choice and needs. They should be quick, easy, secure, cost effective and widely available to support financial inclusion.
c.) This should include access to a diverse landscape such that there are alternative forms of payment to those currently in existence (such as credit and debit cards), including the ability to make account-to-account payments to businesses at the point of sale in a broad range of use cases.
Outcome 3: Resilience of infrastructure and the wider ecosystem
a.) There must be end-to-end resilience across the payments chain for retail payments. This includes the need for agile risk management frameworks that enable providers to respond to emerging threats.
b.) Policymakers must also have the tools to address single points of failure arising from concentration in service provision at critical points in the chain, for instance through expanding the Bank of England’s regulatory payments perimeter.
Outcome 4: Effective governance and funding
a.) Payment systems must have governance frameworks that reflect the views of direct and indirect users of the infrastructure and enable effective supervision.
b.) Regulations and financial market infrastructure rulebooks must keep pace with a changing consumer landscape to maintain public confidence in payment systems. This includes tackling authorised push payment (APP) scams through better prevention and detection as well as appropriate consumer protection arrangements.
c.) Infrastructure providers must have sustainable and coherent funding and revenue models to ensure they can invest in their resilience and modernisation."
Under the National Payments Vision which was announced in October 2024, the government wants to "...achieve a trusted, world-leading payments ecosystem delivered on next generation technology, where consumers and businesses have a choice of payment methods to meet their needs" and that this payments ecosystem is "a critical underpinning to the government's central growth mission and its ambition to deliver world-leading rates of GDP growth". Note the word "choice"; you'll have a choice of payment methods until they decide that you don't.
In closing, let's pick out the most pertinent section of the update with my bolds:
"No decision has been made on whether to proceed with a digital pound. After completing the design phase over the next couple of years, including taking account of developments in the wider payments landscape, the Bank and Government will assess the policy case for a digital pound and determine whether or not to proceed. A digital pound would only be introduced with Parliament’s approval, requiring primary legislation. This legislation would safeguard users’ privacy, guaranteeing that neither the Bank nor the Government could access users’ personal information nor control how households and businesses use their money. Further public consultation would precede the introduction of primary legislation by the Government."
With 134 nations proceeding with the movement toward a CBDC according to the Atlantic Council's CBDC Tracker as shown here:
...it's just a matter of time before the Bank of England launches a full-fledged CBDC ecosystem no matter what they are telling a reluctant public now. The idea that a CBDC will be used alongside physical banknotes is just a way to lull consumers into an eventual full-fledged CBDC ecosystem in which cash is no longer used. I cannot imagine a situation where Parliament would act against the will of the Bank, particularly given that the U.K. government has already taken the important pre-step of announcing the launching a digital ID mobile app aka GOV.UK.Wallet which will be available in mid-2025 as shown here:
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