The Bank of England (BoE) and HM Treasury of the United Kingdom have provided an update on their progress in response to the consultation regarding a central bank digital currency (CBDC) that was initiated back in February 2023. In an announcement made on January 25th, the BoE emphasized that no definitive decision has been reached regarding the launch of a digital pound. However, they remain committed to thoroughly exploring the feasibility and various design options for a CBDC.
One of the paramount objectives in the development of a UK CBDC, as highlighted by both the UK government and BoE, is “privacy and control.” They have unequivocally stated that should a digital pound be introduced, it will necessitate the introduction of primary legislation to safeguard users’ privacy and control. Importantly, both the Bank and the Government will not have access to any personal data of digital pound users, ensuring that individuals have full autonomy in managing their digital currency. This proactive stance is in response to widespread concerns among UK residents about potential government surveillance of financial transactions and fears of diminished financial privacy linked to the introduction of a digital pound.
Transparency regarding the potential costs associated with launching a CBDC has also been a point of focus. The self-regulatory trade association CryptoUK has urged the UK government and the Bank of England to provide more comprehensive details, including clear plans and timelines for the development of the digital pound. This additional information is seen as essential to providing certainty to crypto digital asset businesses and potential investors, given the evolving landscape of digital currencies.
The BoE and HM Treasury have indicated that, if they decide to proceed with the CBDC plan, the digital pound – informally referred to as ‘Britcoin’ – is not anticipated to be launched before 2025. The UK has experienced changes in leadership since the initial proposal of the digital pound, leading to questions regarding the direction and continuity of the project.
Meanwhile, across the Atlantic in the United States, the concept of a digital dollar has become a potential campaign issue in the upcoming 2024 Presidential Election. Although Florida Governor Ron DeSantis, a vocal opponent of CBDCs, has exited the race, former U.S. President and leading Republican candidate, Donald Trump, has vehemently expressed his opposition to a digital dollar, pledging to “never allow” its implementation as a safeguard against government tyranny. The ongoing evolution of digital currencies remains a subject of intense debate and scrutiny on both sides of the Atlantic, with significant implications for the future of finance.
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