The Bank of England is rethinking its plans for the digital pound, reflecting growing uncertainties about its value in the UK's financial system.
Doubts About the Necessity of Digital Pound
According to Bloomberg, the Bank of England (BoE) is re-evaluating its plans to launch a digital pound, citing increasing doubts about its necessity and benefits. Governor Andrew Bailey informed the Parliament's Treasury Committee that if commercial banks can successfully innovate payment systems, the BoE would need 'a lot of convincing' to proceed with a CBDC.
Global Slowdown in CBDC Interest
The UK’s CBDC development has lagged behind other jurisdictions, with reports noting that Britain's digital pound remains in the development phase while others advance to pilot stages. A final decision has yet to be made, but the cautious tone from the BoE indicates that the digital pound project could be shelved if alternative payment innovations prove effective.
Concerns and Perspectives Around CBDC
The UK’s potential retreat aligns with a broader slowdown in global CBDC enthusiasm. The digital pound initiative has faced criticism from lawmakers, conspiracy theory groups, and citizens, with over 50,000 public responses—mostly critical—raising concerns about privacy and the risk of bank runs during financial crises. There are also worries about Big Tech or foreign stablecoins undermining the British pound if a domestic digital currency is not pursued. However, skepticism around CBDCs is not limited to the UK.
In conclusion, the discussions surrounding the digital pound emphasize important issues related to innovations in payment infrastructure and the potential risks associated with launching CBDCs.
