The Digital Pound Foundation has responded to the Bank of England’s July 2024 discussion paper on innovation in money and payments (download here), offering insights drawn from its members’ expertise in digital money and central bank digital currency (CBDC) projects. Our response emphasises the foundational role a digital Pound could play in securing the UK’s financial leadership, enhancing innovation and efficiency across the payments landscape.
A key focus of the DPF’s response is the current array of digital money projects and pilots, such as Project Meridian, Project mBridge, and the Regulated Liability Network (RLN). While these projects showcase the transformative potential of distributed ledger technologies (DLT), the DPF highlighted challenges around project overlap and duplication, advocating for a unified infrastructure supported by clear timelines and accountability to enable widespread adoption.
We also underscored the importance of technology-neutral regulations, cautioning against policies that might favour DLT. The response stresses the need for interoperability in cross-border transactions and explores the potential benefits and risks of programmable platforms. Our response distinguished between programmable money and programmable payments, highlighting how these features, if thoughtfully implemented, could streamline processes in sectors like real estate and investment funds.
On financial stability, we raised concerns about over-reliance on specific platforms, such as the RLN, which could introduce concentration risks. As digital infrastructure expands in financial markets, we urged regulators to monitor systemic dependencies that could impact resilience. Additionally, our response called for regulatory clarity on private forms of digital money, such as stablecoins and tokenised deposits, to ensure innovation and investment in these areas proceed without unnecessary limitations.
In the Digital Pound Foundation’s vision, a diverse digital money ecosystem should maintain the “singleness” of money, ensuring different forms are easily exchangeable at stable value. We expressed support for ongoing experimentation with wholesale CBDCs and synchronisation operators, aiming to build infrastructure that serves both retail and wholesale sectors effectively.
Overall, the our response reinforces the need for a regulatory framework that supports innovation while balancing risks, positioning the UK as a forward-thinking leader in digital payments.
