The Bank of England and HM Treasury are intensifying their exploration of a digital pound CBDC. As part of their commitment to transparency, they have published a set of design notes outlining the emerging framework for the digital pound. These notes provide early insights into the Bank’s thinking on key aspects, including technology, regulation, and governance, while also highlighting the need for continued dialogue with stakeholders from business, civil society, and the public.
These design notes serve as a foundation for further discussions, making clear that the digital pound is still in its exploratory phase. No final decision has been made yet on whether to proceed with developing the currency, with a final decision contingent on progress through consultations, ongoing work, and approval by Parliament should the project move forward.
The design notes introduce the broader framework for the digital pound, noting its potential as a complementary digital asset to cash. The digital pound would be issued by the Bank of England and would aim to provide households and businesses with a secure, trusted, and efficient means of digital payment. Designed to be easily exchangeable with bank deposits and cash, it would maintain public trust in central bank money in an increasingly digital economy.
A key feature of the proposed model is a public-private platform. The Bank of England would operate the core ledger, ensuring the infrastructure is secure and resilient. Regulated private firms would then interact with the infrastructure, offering services to users and developing innovative applications based on the digital pound. This could encourage competition and innovation within the payments landscape, offering new opportunities for the private sector.
The design notes outline the proposed blueprint framework, which is organised around four core components:
- Product Vision and Strategy: This includes the goals of a digital pound and how it would meet public needs, providing value to users, merchants, and ecosystem participants. The primary motivations for the digital pound are ensuring continued access to central bank money and promoting innovation within the payments ecosystem.
- Scheme and Regulation: This component outlines the roles and responsibilities of participants in the digital pound ecosystem, including commercial and regulatory considerations. It will also define the operational rules, user protections, and privacy regulations needed to ensure a safe and secure digital currency.
- Technology: The blueprint will provide the technological infrastructure necessary to support digital pound transactions. This includes everything from end-user devices like mobile phones to the platform layer that supports the core ledger. The focus is on ensuring a highly secure system capable of adapting to future technological advancements.
- Operations: To ensure the successful implementation and operation of the digital pound, the blueprint will also address governance, risk management, and the ongoing operation of the technology platform. This includes cybersecurity considerations and ensuring that the digital pound remains available, resilient, and reliable.
Stakeholder engagement remains central to the design phase, and the Bank of England and HM Treasury are inviting feedback on the proposed components of the blueprint. They plan to continue working with a wide range of stakeholders, including banks, fintech companies, and the public, to ensure the digital pound meets diverse needs while upholding key policy objectives.
For those interested in providing feedback on the design notes, the Bank of England has set up a dedicated channel for input via email at CBDC@bankofengland.co.uk. Further updates and insights into the progress of the digital pound design phase will be published on the Bank’s news page.
As the project moves forward, further design notes and updates will be published, providing deeper insights into specific topics and components. The blueprint itself, once completed, will serve as the foundation for assessing the benefits and costs of a potential digital pound and will guide future decision-making.
This marks a significant step in the development of a digital pound, a currency that could reshape the UK’s payment landscape, enhance financial stability, and drive innovation in digital payments. We at the Digital Pound Foundation are pleased to see the Bank’s continued progress in exploring the potential of a CBDC in the UK and we look forward to aligning our efforts with these workstreams and contributing to discussions on key topics, development activities, and the evolving commercial and regulatory landscape.
Our goal is to provide valuable input, drawing on the diverse expertise and capabilities of our member organisations. If your organisation is working in the digital money space and would like to be involved in our working groups, roundtable discussions, and events, head over to our membership page for more details, or reach our directly to our Membership and Community Manager, Michelle Brook.
