British authorities will decide no earlier than next year on the potential implementation of a state-backed digital pound. The Bank of England and Britain’s finance ministry are continuing with the design phase after a public consultation that received 50,000 responses, with privacy concerns being a prominent issue. No final decision has been made to pursue a central bank digital currency (CBDC), and a decision on whether to proceed to the build phase is expected around the middle of the decade.
Prime Minister Rishi Sunak supported the idea when he was finance minister in 2021, but the digital pound would likely not be operational until near the end of the decade if approved. Proposals suggest that individuals could hold electronic pounds up to a limit of 10,000 to 20,000 pounds, without earning interest. Banks have advocated for a lower limit due to concerns over potential outflows from traditional bank accounts.
British lawmakers have not yet been convinced of the necessity for digital cash, and privacy issues are also a concern for other central banks, including the European Central Bank and the US Federal Reserve. The European Union’s progress on a digital euro has been hampered by similar concerns.
The UK government states that a digital pound would be private but not anonymous, allowing for the tracking of transactions suspected of involving money laundering or financing terrorism. However, it would not replace physical cash, ensuring continued access to an anonymous payment option. The government also plans to ensure privacy through legislation and further public consultations if the project advances. The digital currency would not be programmable to block specific transactions, addressing some privacy advocates’ concerns.
