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The “digital pound,” a digital currency issued by the UK central bank, was the subject of a consultation document published on February 7 by the Bank of England and the HM Treasury division.
Additionally, it stated that strict privacy and data protection rules would apply to the CBDC. “It would be privacy-enhancing by design and would allow users to make choices about their data,” the bank stated.
Although the Bank of England stated that it was too early to decide on the launch of the digital pound, it believed that one will likely be required in the future.
According to the document, households and companies would use the retail CBDC for their regular payment requirements. Additionally, it would be transferable between parties and could be used for both in-store and online buying.
The digital pound will coexist with cash and be convertible into both that currency and bank deposits. Additionally, the fact that it would be mobile-friendly suggests that the central bank is also creating a digital wallet.
The bank acknowledged the loss in cash payments, which fueled its push for a digital economy. In 2021, nearly 60% of UK transactions were made with a card, while 32% of transactions using contactless technology.
Since it continues to be favored by many citizens, it is not yet prepared to do away with currency.
“Around 1.2 million UK adults do not have a bank account and around one fifth of people name cash as their preferred payment method.”
More significantly, the report made it clear that neither the Bank of England nor the government would have access to any personal information. This claim should allay concerns that governments are using CBDCs as instruments for financial surveillance.
The digital pound would also be accessible to non-UK residents, unlike in many Asian countries, it said. This could be an effort to turn people away from decentralized cryptocurrencies, as the UK central bank is adamantly opposed to them.
Except for Nigeria, all 11 countries that have established a CBDC are located in the Caribbean, according to the CBDC tracker maintained by the Atlantic Council. Additionally, 17 countries are conducting pilot projects, most of which are in Asia. Along with 33 other nations, the UK is still in the development stage of its CBDC rollout.
In related news, the Bank for International Settlements (BIS), based in Switzerland, declared on February 7 that it will prioritize CBDCs in 2023 to enhance payment systems.
