Britain Ponders Introducing Digital Pound (Worthy News In-Depth)

By Stefan J. Bos, Chief International Correspondent Worthy News

LONDON (Worthy News) – The Bank of England (BoE) is working on the introduction of “a digital pound,” a central bank digital currency (CBDC) that critics say will allow for the meticulous recording and monitoring of transactions.

However, BoE Governor Andrew Bailey stressed in comments monitored by Worthy News on Monday that his financial institution is “reluctantly” preparing to create a form of digital money accessible to the general public.

Bailey added that the move is necessary as commercial banks “risk failing” to keep up with less-regulated tech firms.

The BoE and Britain’s finance ministry said they will not decide before 2025 at the earliest whether to introduce the state-backed digital pound, also known as CBDC, to the public amid broad privacy concerns. “That (CBDC) is not my preferred option, but it’s one we can’t rule out,” Bailey recently told the Group of Thirty in Washington, a forum for central banks and commercial bankers.

Bailey does not want day-to-day payments or banking-type services to shift to cryptocurrencies or services from tech companies that he claims are “less safe or private” than banks.

Britain’s lives leftist Labour-led government says a digital pound would “be private but not anonymous,” unlike physical cash.

As with existing bank accounts and credit card payments, authorities would be able to track transactions if they “suspect” they may be involved in money laundering or finance terrorism.

PRIVACY CONCERNS

Privacy advocates fear those rules could be misused to financially pressure and control innocent individuals or groups critical of government policies. However, “A digital pound would not replace cash, so the public would continue to have access to an anonymous payment option,” the BoE and government responded.

The use of physical cash is dwindling in Britain, and the BoE has said a state-backed digital option could provide alternatives to existing bank payments or separate payment systems that large technology companies might develop.

The government said that if the project goes ahead, legislation would be put in place to ensure privacy following further consultation, adding that it also planned further public consultations.

Yet in a report “Enhancing the Privacy of a Digital Pound” obtained by Worthy News, even authors of the BoE, the Digital Currency Initiative, and MIT Media Media Lab expressed privacy concerns. “Despite the potential benefits to consumers and the need to reduce risks of fraud and other financial crime, that information might also be misused unless there are sufficient safeguards to protect user privacy,” the report said. “When details about consumers’ purchases and payments are available, the data may give insight into their lives, choices, preferences, and health.”

While Britain’s electronic payment infrastructure already provides fast transfers with no upfront costs for the public, future forms of digital currency could offer more options in areas such as automatic payments, Bailey explained.

“Commercial bank money, i.e., the banking system, is the best home for that innovation,” he stressed.

ONLY GAME?

“But… are they the only game in town? At the Bank of England, we’re continuing to prepare for a retail CBDC because, to be frank, we are not yet seeing enough evidence that innovation will happen in the commercial banking system.”

Commercial banks might be avoiding innovation because they made too much profit from the current system, the BoE governor suggested. “To be particularly frank about this, if the rents that are being earned from the ‘rails’ (payment systems) act to inhibit innovation and act to inhibit competition, that is why … we need a retail CBDC on the table,” Bailey argued.

Yet, even if the project does get a go-ahead, it is unlikely to be operational until near the end of the decade, according to experts familiar with the preparations.

Under the proposals, Britons could hold electronic pounds – with the same value as physical cash – up to a limit of 10,000 to 20,000 pounds ($12,700-$25,400). Like cash, the money would not pay interest.

Banks had reportedly lobbied for a lower limit of 3,000 to 5,000 pounds, fearing the project could lead to an outflow of money from standard bank accounts.

Recently, British lawmakers said that the case for digital cash had not been made. Other central banks, including the European Central Bank and the U.S. Federal Reserve, also wrestle with privacy issues.

The European Union’s legislation for underpinning a digital euro has been slowed by privacy concerns, prompting the bloc’s financial services chief Mairead McGuinness to say last year that it was not a “Big Brother project.

Yet that didn’t take away concerns from right-wing commentators. “The push for a digital pound represents a threat to financial freedom and personal privacy,” wrote the Natural News website. The digital pound, it warned, is “establishing control over citizens’ financial lives and moving towards a dystopian future where financial independence becomes a relic of the past.”

Copyright 1999-2025 Worthy News. This article was originally published on Worthy News and was reproduced with permission.