Central Bank Digital Currency (January 2024)

Thank you for contacting me about the ‘digital pound’ and Central Bank Digital Currencies (CBDC).

"The way we use money in the United Kingdom - as it is across the world - is changing. It is important to stress that whilst cash remains important for a significant number of households, banknotes, issued by the Bank of England, are being used less frequently by households and businesses. New technologies are allowing for the emergence of new forms of digital money, and new ways and devices to pay for goods and services with it. International developments have the potential to affect the UK domestically and as a global leader in finance.

The Government and the Bank of England have been working together through the Central Bank Digital Currency Taskforce to explore the benefits and risks of a potential CBDC.

On the basis of their work to date, the Bank of England and HM Treasury judge that it is likely a digital pound will be needed in the future. It is too early to commit to building the infrastructure for one, but the Government is convinced that further preparatory work is justified.

A digital pound would be a new form of digital money for use by households and businesses for their everyday payments needs. As part of the wider landscape of money and payments, it would sit alongside, not replace, cash – a digital counterpart to familiar, trusted banknotes and coins, subject to rigorous standards of privacy and data protection. This is in line with the Government's and my ambition that public trust in money remains high and that modern forms of money and payments meet the evolving needs of individuals and businesses.

I am dubious about crypto assets and stablecoins, but the digital pound would be sterling currency issued by the Bank of England and not the private sector.

To inform ongoing work on CBDCs, the Government and the Bank of England launched a consultation to seek feedback on the policy and technical work undertaken so far in order to inform a future decision on whether or not to progress to building and launching a digital pound. The consultation stopped accepting responses on 30 June, and HM Treasury is considering feedback.

Thank you again for taking the time to contact me.

Yours sincerely,

 

Sally-Ann Hart MP"