Progress update: Digital Pound Design Phase

Introduction

The Bank and HM Treasury have continued work to explore a potential digital pound. If introduced, the digital pound would be a new form of central bank money available for use by households and businesses for everyday payments. No decision has been made on whether to introduce a digital pound. The current design phase of the digital pound ends in 2026.

We undertook to publish periodic updates on progress during the design phase. This annual progress update expands on our recent update and the previous annual update. It sets out how our work on the digital pound fits into the UK’s evolving payments landscape as we move towards finalisation of the blueprint. This will feed into the decision on whether to proceed with a digital pound, or to put more emphasis on other initiatives to modernise payments in the UK.

Our work on policy analysis, experimentation, and engagement during the design phase has focused on developing the detailed design for a potential digital pound, and deepening our understanding of the technology and infrastructure needed to support it. The work is producing the evidence base for a comprehensive assessment of the opportunities, feasibility and risks associated with any introduction of a digital pound.

Drawing on the evidence being developed through our assessment, blueprint work, technology experiments, and engagement with industry, academia and civil society, the Bank and HM Treasury will set out their decision on next steps later this year.

The work undertaken during the design phase is also being used to support the National Payments Vision (NPV), which sets out the government’s ambition for a trusted, world-leading payments ecosystem delivered on next generation technology.

Following our 2023 consultation on the digital pound we made four commitments on decision-making and the role of Parliament, privacy and data protection, programmability and users’ control over their money, and safeguarding access to cash. The annex to this document includes an overview of how these commitments have been taken forward during the design phase.

Retail payments and money

The Bank’s role in the UK’s National Payments Vision

In November 2024, the Government published the National Payments Vision, setting out its ambitions for 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’. As part of this, the government established the Payments Vision Delivery Committee (PVDC) to enhance regulatory coordination and drive implementation of key activities – including setting out the approach for the development and delivery of the UK’s retail payments infrastructure needs.

In July 2025, the PVDC announced a new model for the infrastructure’s design and delivery, based on collaboration between the public and private sectors, balancing the strategic direction that the public sector provides with the deep industry knowledge and delivery capacity of the UK’s payment ecosystem. In line with this, the Bank has convened and chairs the Retail Payments Infrastructure Board (RPIB). RPIB is a senior advisory board, with broad representation across the payments ecosystem, responsible for translating the strategy set by PVDC into design.

In November 2025, the PVDC published its Strategy for Future Retail Payments Infrastructure which will guide the work of the RPIB and sets out the Committee’s strategic outcomes for future retail payments infrastructure, taking account of HMT and the Authorities’ objectives for the ecosystem at large.

Table 1: The Payment Vision Delivery Committee’s outcomes for future retail payments infrastructure

Outcome 1	Consumers and businesses have a greater choice of innovative and cost-effective payment options that meet their needs
Outcome 2	Payments operate seamlessly as part of a diverse multi-money ecosystem, with interoperability between new and existing forms of digital money
Outcome 3	Consumers and businesses can trust that their payments are protected from fraud and wider financial crime
Outcome 4	Participants have fair and non-discriminatory access to the infrastructure – maximising competition and scope for innovation across the payments ecosystem
Outcome 5	The payments ecosystem is operationally and financially resilient

The PVDC has published a Payments Forward Plan, which sets out a plan of initiatives in retail and wholesale payments as well as for digital assets. This provides a clear and coordinated regulatory roadmap for the payments sector over the next three years.

Our work on a digital pound and the design and delivery of the future retail payments infrastructure will interact in several ways.

• Strategic objectives – the strategic objectives of work on the digital pound will remain complementary with the PVDC Strategy for retail payments, ensuring clarity for industry and other stakeholders.
• Preserving optionality – retail payments infrastructure should be designed in a way which proportionately takes account of the Bank and HMT’s work on a potential digital pound.
• Design insights – analysis completed for the digital pound, including on interoperability between current and future forms of money, will be used by RPIB regardless of whether a decision is taken to progress a digital pound.

A multi-money future

PVDC stated in November that a key desired outcome for the UK’s future retail payments is that payments should operate seamlessly as part of a diverse, multi-money ecosystem. This ecosystem should support interoperability between new and existing forms of digital money – including traditional bank deposits, tokenised bank deposits, systemic stablecoins, and a potential digital pound. Different forms of money should be freely exchangeable, allowing businesses and consumers to choose what best meets their needs. This will help the UK to remain at the forefront of payments innovation, supporting resilience, financial stability and trust in money.

The Bank and other authorities intend to support this ambition in three ways:

• Providing infrastructure - the upgraded Real-Time Gross Settlement (RT2) platform - for settling transactions in central bank money. This includes working to ensure tokenised wholesale transactions can settle in central bank money. A payment system using RTGS functionality to settle the sterling cash leg of tokenised transactions using a tokenised representation of central bank money is already live in the UK.^{footnote [1]} We are testing full integration (through ‘synchronisation’ functionality) of RTGS with tokenised transactions this year before fully deploying this functionality in production.^{footnote [2]}  We are also experimenting with going further, and tokenising central bank money itself on a separate, distributed ledger – so-called wholesale central bank digital currency (wCBDC).^{footnote [3]}
• Designing regulatory frameworks. The Bank of England, together with the Prudential Regulatory Authority, Financial Conduct Authority and Payment Systems Regulator, all have a role in relation to payments in the UK.^{footnote [4]} The PRA has set out its expectations for banks’ issuance of tokenised deposits^{footnote [5]}; the FCA and the Bank consulted in 2025 on the regulatory regime for stablecoins and systemic stablecoins respectively.^{footnote [6]}
• Setting strategy that encourages investment and innovation across the payments ecosystem, ensuring progress aligns with public policy goals and delivers better outcomes for users.^{footnote [7]}

The RPIB and Authorities will consider what is needed from the next generation of UK retail payments infrastructure and wider ecosystem to deliver a multi‑money system, including to avoid ‘walled gardens’ with low interoperability.^{footnote [8]}

Interoperability is a core requirement of a multi-money system, necessary to support both existing and emerging forms of digital money in the UK and internationally. As a new form of digital public money, the digital pound would be an option that would be freely exchangeable with other forms of money, whether public or private.

Digital pound design phase

The digital pound design phase consists of four interconnected workstreams:

• Assessment: an analysis of the wide range of factors that influence the opportunities, feasibility and risks around proceeding to build and introduce a digital pound.
• Blueprint: a proposed model and design of a potential digital pound, its payments infrastructure and wider ecosystem, which highlights opportunities for enhanced functionality, new use cases, cost efficiencies and revenue streams.
• Experiments and proofs of concept: focused experiments in collaboration with innovative organisations and private sector firms. These establish the technological feasibility of different design choices, both for a digital pound and in retail payments more broadly.
• Engagement: collecting feedback from stakeholders across industry, academia and civil society on opportunities, risks and user needs in digital money. This input informs the digital pound blueprint design.

Assessment

The assessment is being undertaken jointly by the Bank and HM Treasury. It is considering a wide range of factors that influence the opportunities, feasibility and risks around building and introducing a digital pound; this includes public policy, strategic, commercial, technical and operational considerations.

The assessment builds on the foundations set out in the 2023 Consultation Paper in three key respects. First, it takes as a key input a more tightly specified and detailed design for the digital pound, as set out through the blueprint. Second, it provides a deeper assessment of the impacts of introducing a digital pound. Third, it takes account of industry feedback over the intervening three years.

The assessment explores the following considerations:

• Is the digital pound, as set out in the blueprint, needed? We are considering the strategic case for a digital pound and whether proceeding to build is justified in view of the core objectives of supporting the singleness of money while fostering competition, innovation and choice in payments, established at the outset of the design phase. We are also considering the broader domestic and international context.
• Would a digital pound support wider aspects of public policy? We are considering the potential impact of a digital pound on a range of wider policy issues, setting out the balance of opportunities and risks, and considering whether a digital pound could be introduced safely, and without detrimental economic or societal impacts. For example, a digital pound should neither impair the Bank’s ability to conduct monetary policy effectively nor undermine financial stability. It should also not exacerbate financial exclusion.
• Is the digital pound financially and commercially viable? We are considering the financial and commercial factors relevant for the private sector (assessing the commercial incentives to participate in the digital pound platform model and its supporting payments infrastructure and ecosystem) and for the public sector (ensuring that a digital pound would not have a negative long-term impact on public finances).
• Can a digital pound be introduced safely and reliably? We are considering the operational practicalities and the feasibility of delivery, including assessing the approach to cyber security, operational resilience and business architecture.

A decision on the future of the digital pound and our assessment of the blueprint will be published later this year. It will present evidence developed during the design phase and explain the rationale for the decision.

Blueprint

The digital pound blueprint will bring together the policy, technology and operational work from the design phase into a single, consolidated proposed design. It will set out the potential digital pound’s product features, regulatory approach, technological choices and how it (and its payments infrastructure and wider ecosystem) could operate in practice. The blueprint’s development is being supported by policy analysis, stakeholder engagement and practical experimentation.

We published six design notes in 2025. Publishing design notes has been an important part of the blueprint development process, allowing us to share our emerging thinking on specific topics and gather feedback. This feedback has directly influenced and shaped our work.

Blueprint framework

The blueprint framework design note sets out the aims, scope and focus areas of our model for the digital pound. It includes the product vision and strategy, scheme rules and regulation, the technology architecture required, and the operations needed to make it work.

Intermediary roles and scheme rulebook

Robust frameworks are essential for fostering innovation. The intermediary roles and scheme rulebook design note presents initial thinking on the roles and responsibilities of intermediaries (which deliver user-facing services) in a digital pound ecosystem. It outlines proposals for consistent standards in resilience, privacy and consumer protection, supporting responsible innovation and public trust in money, without compromising financial stability.

Interoperability models for UK based payments

Interoperability is central to a successful and functional multi-money system. If money is to be exchanged seamlessly, friction free and without any loss in value then there must be mechanisms to support this.

Defining these mechanisms is a key part of the Bank’s wider collaboration with other authorities and industry to deliver the UK’s next generation retail payments infrastructure.

Interoperability between forms of money is also key to achieving the two primary motivations in considering a digital pound, as set out in the consultation paper: (a) preserving access to retail public money as a universal, financially risk-free asset in an increasingly digital economy, and (b) supporting innovation, choice and efficiency across the UK payments system.

The interoperability models for UK based payments design note sets out initial models for how a digital pound could operate alongside other forms of money and discusses the trade-offs involved. The digital pound would be one option within a broader, diverse multi‑money ecosystem; ongoing exploratory work is examining what this means in practice.

Product strategy

The product strategy design note outlines how a digital pound could develop from launch and be used for everyday payments, including at the point of sale when consumers pay merchants. It is grounded in current retail payment trends while remaining adaptable for the future. It sets out a staged product roadmap for intermediaries to add capabilities over time, with a clear method for prioritising what to enable at launch, were the decision taken to introduce a digital pound. While the proposition for individual users would be the early priority, merchant readiness at launch would be essential for practical use. As adoption grows, intermediaries could expand offerings, helping business users realise operational benefits.

Were it to be deployed, this product roadmap is intended to manage delivery risk, provide clarity for intermediaries, and ensure a digital pound would be useful for users from day one.

Alias service

An alias is an alternative identifier used instead of a primary one, simplifying communication and enhancing privacy. Widely used in digital systems, aliases are increasingly important in account-to-account (A2A) payment innovation. For digital money accounts, they can boost convenience, privacy, security, and interoperability across schemes and jurisdictions.

The alias service design note explores how account aliases could enhance retail payments and outlines key functionality for a digital pound alias service. It also explores the role the Bank, as operator of the core digital pound infrastructure, could take in enabling a digital pound alias service.

Offline payments

Offline payments support scenarios where there is no internet connection or where that connection is not reliable or performant enough. The offline payments design note explains how deferred offline payments (where transactions complete later when connectivity returns or via batch processing) could work. This would be similar to card functionality used in transport and unattended terminals.

The design remains flexible, allowing for future consideration of device offline payments, where money moves directly between devices without the online system seeing the transaction until reconnection. These are not present in mainstream retail payments today but could unlock future innovation.

Experiments

We have conducted experiments across various areas to deepen our understanding of design options for a digital pound. These experiments also provide valuable insights for RPIB’s work on the design of retail payments infrastructure more broadly. Experiments have explored specific technical questions including the technical feasibility of different merchant acceptance channels, proofs of concept to enable offline payment capabilities and how privacy-enhancing technologies could help deliver user privacy. We have two ongoing technology experiments: prototype ledger architecture and the Digital Pound Lab.

Prototype ledger architecture

This experiment builds upon the Bank’s extensive research into advanced transaction processing systems. It aims to confirm the feasibility of a scalable and modular digital pound system aligned with the rigorous standards specified in the 2023 Technology Working Paper. The project encompasses comprehensive testing using realistic synthetic transaction data, simulating extreme operational scenarios across geographically distributed data centres. The objective is to assess system resilience and ensure that the prototype reliably accepts and processes transactions under highly demanding conditions without compromising performance or data integrity. We expect to publish our findings once this work is complete.

Digital Pound Lab

This is an experimental platform for industry to test use cases and explore potential business models for a digital pound, understand design options in retail payments infrastructure more broadly, and foster broader innovation in industry. Within the Lab, we are building a number of capabilities that participants can use to develop and test their own use cases, including:

• Trusted credentials - which allow users to prove specific characteristics about themselves in a privacy preserving way. In Phase 1, we used trusted credentials to securely present payment requests, letting payers verify that QR codes match the intended payee. We also developed a ‘digital cheque’ use case, which allows individuals or businesses to send a payment without knowing the payee’s alias in advance. The cheque is shared via a QR code and can only be redeemed by a user who meets the conditions set by the payer.
• Allowances - which enable users to authorise others, such as family members, merchant applications or agents to make payments from their wallets up to a predetermined amount. In Phase 1, we explored allowances for person-to-person payments, but this could also be extended to agentic or Internet-of-Things payments in the future.
• Locks - which enable users to set aside funds and set conditions for how those funds can be used. Unlike allowances, the money held in locks cannot be spent until the conditions are met or the lock expires. In Phase 1, we used locks to facilitate delivery-versus-payment by retaining funds in the user's account until shipping requirements were fulfilled. Additionally, we examined how locks could support collaborative payments, such as pooling funds with others for shared expenses like birthday presents or events.
• Smart contract functionality - which enables us to demonstrate interoperability between a digital pound and external programmable ledgers. In Phase 1, we explored atomic transactions between the smart contract platform and the digital pound ledger using a non-fungible token (NFT) swap as an example, which could be extended to other digital assets.

Phase 1 focused on use cases defined by the Bank, with the aim of understanding whether and how a digital pound could improve existing payment services. A small number of firms were selected to test these use cases. Each participant chose one use case or a combination of use cases to explore and develop proofs of concept. The complete list of use cases the Bank proposed for Phase 1 are listed in Annex 2 of the Lab Terms of Participation.

• Fluxpay Limited explored point-of-sale digital pound transactions using both alias-based payments and QR codes, tiered wallets and tourist wallets. They developed a proof-of-concept digital wallet platform with tiered know your customer (KYC) features and a link to a simulated foreign exchange service for cross-border transactions.
• LINK, in collaboration with Consult Hyperion, focused on cashback at point of sale. Their solution uses the LINK messaging network to demonstrate point-of-sale payments and cash withdrawals (cashback with and without purchase) through digital pound wallets.
• NOBO Finance, in collaboration with Applied Blockchain, explored conditional business-to-business payments. Their solution demonstrates how cross-border trade finance could be streamlined and made more accessible for small and medium-sized enterprises, leveraging Applied Blockchain’s Silent Data technology and the locking features available in the Lab.
• Yotra Limited explored omni-channel payments, tiered wallets, and tourist wallets. Their solution is a transport payment platform designed from the perspective of transport operators, residents, and visitors, enabling a frictionless payment experience across travel networks.

We hosted a showcase event in January 2026 to demonstrate the use cases built in Phase 1 and have since published all the use case demo videos. We look forward to the new use cases participants will build in Phase 2 of the Lab. Applications are open until 31 March 2026, and work will run to July 2026.

Engagement

Our engagement focuses on collecting technical input and sharing our emerging policy development, including through publishing our experiment reports and design notes. Our stakeholders include senior leaders from financial institutions, academics, civil society groups and merchants, including as part of the CBDC Engagement Forum and Academic Advisory Group (AAG), as well as regional fintech bodies, chambers of commerce across the UK, and other central banks internationally.

In September 2025, the Bank of England and Warwick Business School co-hosted the inaugural Innovation in Money and Payments conference for academics, central banks, international institutions and the payments industry to share ideas on how innovative solutions are changing money and payments.

In 2025, we also launched the Digital Pound Lab Users Group - a collaborative forum designed to support participants during their time in the Lab. It offers a structured environment to share progress on use case testing, provide feedback on remaining activities, and explore future opportunities for the Digital Pound Lab.

Our discussions with stakeholders, and outputs from our engagement fora, support our policy and technical design work and enable a robust assessment of the case for whether to build a digital pound.

What we will do next

Our work on the design phase will end in 2026; we will complete our outstanding experiments and conclude our engagement with technical stakeholders. Our primary focus remains on completing current activities that will feed into the design and the decision on next steps.

• Assessment and blueprint - we expect to complete the design work on the blueprint and publish the assessment later this year, alongside setting out the Bank and HMT’s decision on next steps.
• Digital Pound Lab - During Phase 2, running until July 2026, the User Group will expand, welcoming a broader range of participants from across the financial and technology sectors. It will continue to provide a collaborative environment for sharing insights and influencing the capabilities developed in the Lab for experimentation, with members contributing insights on the capabilities required to support innovative payment services. The Lab remains open for new participants until 31 March 2026.

As part of our work on the National Payments Vision under the Retail Payments Infrastructure Board (RPIB), the Bank is convening three new forums to capture a broad range of experiences, expertise, and knowledge in the development of next generation retail payments infrastructure: Payment End User Forum (PEUF), Payments Innovation Design Group (PIDG) and Payments Academic Advisory Group (PAAG).

Together, these forums will help ensure that RPIB’s work benefits from insights from consumers and small businesses, innovators, tech firms and fintechs, as well as experts from academia and civil society.

Conclusion

Over the course of the past year, we have made continued progress in the design phase of the digital pound project. Our policy work and experimentation on a range of topics relevant to retail payments innovation is helping to shape a future in which households and businesses can choose between different forms of money, confident that they can use and move their money safely within a trusted multi‑money system.

We will announce our decision on whether to proceed with a digital pound later this year.

Annex: Progress on users’ rights, privacy, and protections

In our consultation response, the Bank and HM Treasury made a number of commitments. In this annex, we set out how these commitments have been taken forward during the design phase.

Commitments made in the consultation response

Decision-making and the role of Parliament. In the event that a decision is made to proceed to build, a digital pound would only be introduced once Parliament had passed the relevant primary legislation. Further public consultation would precede the introduction of primary legislation by the Government.

Privacy and data protection. The Bank and the Government would not access users’ personal data through the Bank’s core infrastructure – and legislation introduced by the Government for the digital pound would guarantee users’ privacy. The Bank also committed to exploring technological options that would prevent it from accessing any personal data through the Bank’s core infrastructure.

Programmability and users’ control over their money. Neither the Bank nor the Government will program the public’s money or control their spending.

Safeguarding access to cash. The Bank is committed to providing cash for as long as the public demand it.

How these commitments have been taken forward during the design phase

We have taken into account these commitments during the design phase work.

Programmability enables payments to happen automatically when conditions are met. It links payment activity to other events, such as releasing funds for a train ticket only if the train arrives on time or completing a transaction only when all parts succeed. Programmable payments automate payments under conditions the user sets and approves.

This is different from programmable money which places limits on how or where money can be spent. These restrictions persist after transfer, for example pounds that can only be used at certain merchants or for specific goods. Programmable money would be both prohibited through primary legislation and technically impossible in the architecture.

The design of the digital pound has prioritised technical and structural safeguards that prevent the Bank and Government from accessing users’ personal data through the core infrastructure. The intention is to make privacy a feature of the system, so that protections would not depend on the behaviour or restraint of institutions or individuals. Additional legal and policy measures are being designed to provide additional layers of protection to prevent the Bank and Government from accessing personal data through the core infrastructure.

As part of the design phase, the Bank and HM Treasury has been engaging with external experts to explore strong protections for digital pound users, balancing privacy, usability and technical considerations with anti-financial crime compliance. The Bank has collaborated with the MIT Digital Currency Initiative on research into Privacy Enhancing Technologies (PET) to explore ways to limit data sharing and improve privacy, while a privacy focused industry working group explored issues around user privacy in relation to commercial actors in a digital pound ecosystem.

To support access to cash, the Bank was granted market oversight powers for wholesale cash distribution as part of FSMA 2023, to ensure the continued effectiveness, resilience and sustainability of the wholesale cash supply chain. Alongside this the FCA were given responsibility for ensuring reasonable provision of cash deposit and withdrawal services for personal and business current accounts in the UK. A digital pound would sit alongside cash; it would complement, not replace, cash, or other forms of digital payment.