The Digital Pound

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Link: The digital pound | Bank of England

 

We are looking at the case for issuing a digital pound. This type of money is known as a central bank digital currency (CBDC). It would not replace cash.

 

The digital pound would be a new type of money issued by the Bank of England for everyone to use for day-to-day spending. You would be able to use it in-store or online to make payments.

 

This type of money is known as a central bank digital currency (CBDC). You may also hear it being called ‘digital sterling’ or even ‘Britcoin’. We call the UK version of CBDC the digital pound.

 

The digital pound would be denominated in sterling and its value would be stable, just like banknotes. £10 in digital pounds would always have the same value as a £10 banknote.

 

If we introduced it, it would not replace cash. We know being able to use cash is important for many people. That’s why we will continue to issue it for as long as people want to keep using it.

 

The digital pound would not be a cryptocurrency or cryptoasset. As opposed to cryptocurrencies, which are issued privately, the digital pound would be issued by the Bank of England and be backed by the Government.

 

We have published a Consultation Paper, which explores the need for the digital pound and proposes a set of design choices for it...

[Ditto]

Given you can do most transactions electronically, I'm really struggling to see the purpose or benefit.

[Jawloms]

I assume that one-off person to person transactions would be easier? But that is 100% guess work.........

 

But yeah, struggling to see the actual point?

[Michael]

Given you can do most transactions electronically, I'm really struggling to see the purpose or benefit.

 

Agreed - I must be ahead of time, I've had a debit card for decades

[TechMonkey]

Same as everyone here, heard the news and just thought "Why". WE can move pounds around electronically. Crypto currency is meant to be non-centralised so government can't control or track it so a government sanctioned crypto seems pointless.

I'm sure someone bright will come up with a good use, probably in various shades of grey or borderline legality, and everyone will wring their hands and ask how was this let happen.

[jthompson]

I guess it's different from just using a bank card in that someone could slip a little USB stick containing a digital £10 into my birthday card, without having to arrange a BACS transfer between a bank account they hold and one that I hold.

 

I'm not sure how that works without the 'crypto', since I would have thought that it would at least need to be digitally signed by the central bank. Quite easy for millions of digital pounds to be obliterated in society's collective computer failures, washing machine accidents, accidental sending to landfill, etc. in a way that's less likely to happen with banknotes and coinage.

[localzuk]

I'm not really sure what it is exactly. We already have a digital pound. Its used all day every day by banks. They don't exactly drive trucks full of cash between banks whenever someone does a bank transfer. Neither do they have vaults full of cash matching the deposit amounts. Our entire currency is backed by debt and computers.

 

So, all I can think is that realistically it has to be a token and ledger/processor. Which is a crypto-currency. Just one without any mining etc. With the transactions being logged/processed on a BoE set of computers instead of, say, Visa and your local bank's?

 

The other way it would differ from existing crypto is that wallets would only be able to exist via approved institutions. So, something like an offline wallet doesn't look like it would be a thing? As how would that be regulated?

[Davit2005]

Jus don't seem to carry cash around at all anymore although window cleaners for our block of flats takes cash only.

[flyinghaggis]

I presume the main reason for a "digital pound" would be to provide the central bank greater visibility/better auditing of transactions and more control over the money they're issuing?

[TwistedHelixis]

Is this not just another stable coin? Like Tether, USD Coin or one of the many other stable coins, but controlled from the Bank of England somehow.

[Arcath]

I think the point now is that currently we are moving numbers around in a database when we make payments. The physical currency stays at the bank and there is no way for me to walk into my local branch and say this £10 note in your vault, that's part of my bank balance. With a "digital pound" when I pay for something the money from my account is digitally moved to another. Following the example I'd be able to look at my accounts wallet and say "these pounds are mine", and "that pound was mine".

 

It may have benefits, but not until we are a cashless society.

[2ilent8cho]

I'm surprised at how many seem to be only just hearing about the Digital Pound. Rishi announced it a year ago here https://www.youtube.com/watch?v=pyWhjfRMwyI and lots were saying they were coming before that but generally got brushed off as crazy conspiracy theorists because they said programable money would be used to control the population. Once you have a Digital ID and a Digital Pound, things could dangerous with regard to your freedoms.

[mikeprice]

I'm surprised at how many seem to be only just hearing about the Digital Pound. Rishi announced it a year ago here https://www.youtube.com/watch?v=pyWhjfRMwyI and lots were saying they were coming before that but generally got brushed off as crazy conspiracy theorists because they said programmable money would be used to control the population. Once you have a Digital ID and a Digital Pound, things could dangerous with regard to your freedoms.

 

I was reading about this yesterday

 

Most of what I read made me think the same as people are saying above

 

the one thing I spotted was something something something 3rd parry companies can store the currency in digital wallets something something something

 

sounds like part of the reasons is allow some of the control over some funds to move from the actual banks to 3rd party companies - and hence make - possibly - transfer from one mobile device to another easier and more direct and less regulated

 

All sort of possible problems here - even without getting in frog-worthy territory - but if it is all under the umbrella of the Bank of England then I presume it will be trustworthy

the article I was reading said that lots of other countries have implemented it - or are well on their way to doing so

I just hope no-one finds any 'short cuts' for the Sterling version!!

[jthompson]

Might one outcome be that sterling could more easily be used as cash elsewhere in the world if it can take a digital form?

[Deanuk]

The benefit isn't for you or me. The benefit is for the government.

 

Cash in hand? Goodbye to that.

 

One more step to dystopia.

[LeMarchand]

Might one outcome be that sterling could more easily be used as cash elsewhere in the world if it can take a digital form?

 

I can't see that happening for decades. There are still many countries where you need to pay cash to "grease the wheels".

[E_G_R2]

Regulated and controlled CRYPTO as financial institutions didn't like the idea of CRYPTO as it was.

[MartinT]

Between Google Pay and PayPal, I don't have any problems paying for things electronically.

 

Not sure what, if anything, this will bring me that's different.

[TechMonkey]

The benefit isn't for you or me. The benefit is for the government.

 

Cash in hand? Goodbye to that.

 

One more step to dystopia.

 

But we have electronic cash already in the forms of debit and credit cards and bank transfers, and yet cash in hand is still used. A digital currency isn't going to make those that take cash in hand move.

& maybe cash in hand needs to go away.

[jthompson]

I can't see that happening for decades. There are still many countries where you need to pay cash to "grease the wheels".

 

That could still happen with digital cash, since it wouldn't necessarily be referenced to an account. It could mean that such transactions are done with whatever the most stable currency is, much like US dollars being used in areas where the local currency is less stable. The pound going digital would make that are more realistic prospect, since it wouldn't need there to be physical Sterling in circulation.

 

Where people are citing debit cards, BACS, etc. those are services offered by banks to named customers. I think the idea of a digital currency like a digital Pound would be that cash can change hands digitally without necessarily needing access to banking services. It just needs to be some kind of token that is the digital equivalent of a central bank declaring "I promise to pay the bearer on demand the sum of £1".

 

Like others have said, a stablecoin, but one with the weight of a nation state behind it.

[mikeprice]

I get the impression that this is for teh benefit of businesses - financial ones mainly - and governments

 

not for the ordinary people

 

but lets not get into political territory - there be frogs

[localzuk]

Where people are citing debit cards, BACS, etc. those are services offered by banks to named customers. I think the idea of a digital currency like a digital Pound would be that cash can change hands digitally without necessarily needing access to banking services. It just needs to be some kind of token that is the digital equivalent of a central bank declaring "I promise to pay the bearer on demand the sum of £1".

 

Thing is, the BoE states that their digital pound would need a wallet. And those wallets would only be available via regulated companies. So, effectively, you're back to named bank accounts but with a slightly different implementation.

[Deanuk]

I'm not one for conspiracy theories, but the digital pound has me thinking.

 

I cannot think of one reason other than government control or profiteering for private donors for implementing this strategy.

[jthompson]

Thing is, the BoE states that their digital pound would need a wallet. And those wallets would only be available via regulated companies. So, effectively, you're back to named bank accounts but with a slightly different implementation.

 

True. But might there still be more of a level playing field there? Not everyone has equal access to financial services. Paying for stuff online would be fairer if you're not needing to negotiate the marketplace of credit-worthiness and banking fees.

 

I dunno. It seems like an interesting discussion though. Cryptocurrencies have always seemed to me to be a vapid waste of energy (a tool for crooks and speculators rather than anything with societal value), but digitising an existing currency throws up some different ideas.

[Brax]

It's just another form of control for the government, my mind though just cannot comprehend cash being completely phased out. Unless there's some kind of technology comes in that rapidly shakes everything. We have used physical coins and cash for well over 2000 or so years. It just seems impossible to ever get rid of and I wouldn't want it to go away. EDIT: To add, Crypto is the only thing that has kind of come close in terms of technology but the fact it's De-Centralised is definitely a big factor in it's success. Edited February 9, 2023 by Brax