The Bank of England has announced that it considers shelving plans for a digital GBP for households amid growing skepticism about the project’s benefits.
Following this announcement, officials mentioned to Bloomberg that the central bank wants to be in a position to launch a CBDC if it is eventually warranted. However, at the moment, it is willing to step back if private businesses continue to roll out new electronic payment technologies.
In addition, its staff believe the gains from pressing ahead with a digital pound launch have diminished.
More information on the Bank of England‘s shelving plans for a digital GBP
The BOE has been privately urging the banking industry to accelerate payment developments that could result in similar benefits without the overall creation of a central bank digital currency (CBDC) for consumers.
In addition, the change also reflects the overall dwindling interest globally in the design of state-led digital currencies, as stablecoins and other payment innovations emerge. Alongside this, the Trump administration has blocked further work on a CBDC in the US, citing financial stability concerns, and last month, South Korea’s central bank halted its digital currency pilot program. In contrast, the European Central Bank is still pressing ahead with the development and launch of a digital EUR.
The BOE’s project is currently at the design phase, a process which puts the UK behind many other jurisdictions. At the same time, the central bank and government have yet to make a final decision on whether or not to launch a CBDC.
The potential development of such a digital GBP has raised concerns about consumer privacy and destabilising impacts if investors flooded into state-backed digital currencies, and siphoning cash away from other corners of the financial system.
