Digital pound: an overview
Money is central to our daily lives and the economy. Trust in money is essential.
Money is at the heart of how the economy works and our everyday lives.
Today we can pay in many different ways and this choice is important. People choose what is best for them and what’s convenient in that moment.
Sometimes we prefer to use cash – the banknotes and coins in our wallets – to pay for things, while other times we might pay with the money in our bank accounts, using our cards or phones, especially online.
Cash is provided by the public sector, but bank accounts – whether you use them through cards or apps – are provided by the private sector.
Whichever way you choose to pay, you can always trust the value of the money you’re spending or receiving. A £10 note in your hand will always be worth £10 in your bank account.
Our economy is becoming more digital, and people are using cash less.
Cash is fundamental for many people. As cash is issued directly by the Bank of England, it sits at the heart of the economy. You can rely on it. You can trust it.
In an increasingly digital economy, payments have changed rapidly. New technologies are always emerging, making it easier and quicker to buy the things we want. But this often means we can’t pay with cash, because cash can’t be used online.
We are supporting safe innovation across the financial system.
New technologies are enabling the private sector to innovate in everyday smaller 'retail' payments, made by households and businesses, as well as larger 'wholesale' payments, made by banks and other financial firms.
Part of that innovation is through new forms of money provided by the private sector – both banks and other companies – for smaller 'retail' payments. The Bank is working to make these safe so that everyone can benefit from them.
The Bank is also supporting innovation in wholesale payments, including by upgrading its core technology that sits at the heart of all payments in the UK. This will have a range of new features and capabilities that improve payments and settlements between banks and building societies.
As part of our work on the future of money and payments, we are looking at the idea of a 'digital pound'. It would be a digital complement to our existing banknotes. It would not replace cash.
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.
Importantly, £10 worth of digital pounds would always have the same value as a £10 banknote.
It would not replace cash. Banknotes and coins are important for many people so we will continue to provide them for those who want to use them. You would simply have even more choice when you make payments.
A digital pound would support innovation and choice.
Using the digital pound platform, private companies, big and small, could develop innovative ways for people to pay.
This could make your day-to-day payments even more convenient, and also reduce costs for businesses who accept them. It could allow you to set rules for your payments. For example, you could earmark money to pay for goods, and only release it to the seller if those goods are delivered.
Your rights and privacy will be guaranteed.
The 2023 consultation was an important step in hearing your views on the future of our money. We have listened to your feedback in the tens of thousands of responses we received.
Some of your responses were about the design of a digital pound and what it would be like to use.
But you also raised concerns about important issues such as privacy and freedom of choice.
Just like the money you use today, your trust in a digital pound would be essential. We are taking further steps to address your concerns.
Future laws on any digital pound would guarantee users’ privacy and also guarantee that neither the Bank of England nor the Government would control how you spend your money.
It would be your choice whether to use a digital pound or not.
Parliament will have its say, through the introduction of primary legislation, before any decision to launch a digital pound.
The Government has committed to introducing primary legislation to Parliament before a digital pound could be launched. Your local MP would have a say on this legislation.
The consultation was not the only chance to have your say – we will make sure there are more opportunities to comment on the proposals, including further public consultation prior to any legislation.
In coming years, we will work to design the right digital pound for the UK.
We will test how a digital pound 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 make sure we can design a digital pound that will work for you before any decision is made on whether or not to start building it.