Digital Pound Legislation Will Provide Protections to Privacy and Control, Govt Says

Many respondents to the digital pound consultation said that they had concerns about privacy and control.

AccessTimeIconJan 25, 2024 at 10:33 a.m. UTC
Updated Mar 8, 2024 at 8:27 p.m. UTC
  • The Bank of England and Treasury, the government's finance arm, released the results of the digital pound consultation on Thursday.
  • The U.K. said it will issue primary legislation for a digital pound before this is issued.
  • The digital pound will not make any interest and will have a holding cap of 10-20,000 British pounds, the government proposed.

The U.K. government has said it will ensure that future legislation that comes out for a digital pound will provide protections to privacy and control of money in its consultation response on Thursday.

The consultation on a central bank digital currency (CBDC) was conducted by the government’s finance ministry alongside the Bank of England, and concluded in June. It received over 50,000 responses. A chief concern in the consultation was privacy and control of money.

Countries around the world are exploring the benefits of CBDCs, with Nigeria and the Bahamas being among the first countries to issue them. Major economies like the European Union and China are also running investigations or tests.

The Bank of England and the Treasury are taking a cautious approach when it comes to deciding on whether or not to introduce a digital pound.

“Trust in all forms of money is an absolute necessity," Deputy Governor for Financial Stability at the Bank of England, Sarah Breeden, said in a press release. "We know the decision on whether or not to introduce a digital pound in the U.K. will be a major one for the future of money. It is essential that we build that trust and have the support of the public and businesses who would be using it if introduced.”

The consultation response showed that the proposed digital pound design was largely welcomed. A decision on whether or not to issue a digital pound has not yet been made but that will likely occur between 2025 and 2026. Before a digital pound can be launched, Parliament, the U.K.'s law making body, would have to put through legislation. The legislation introduced will also ensure that the government cannot program a digital pound.

The Treasury Select Committee, a cross party group that scrutinizes the Treasury's work, proposed that a digital pound should have a lower holding limit similar to the 3000 euro cap, something which banks favored also according to the consultation response.

However, the Bank of England has indicated in its consultation response that it is sticking with its 10,000-20,000 British pound cap ($12,727.6 - $25,460.6) on holdings for now but may review this in future as many academics and FinTech providers preferred either this or having no limit at all. The committee also suggested that a digital pound should come with interest rates, something which the central bank does not intend to do either.

The digital pound will be accessible abroad in several countries, except sanctioned ones, someone familiar with the matter told CoinDesk.

"The Bank of England will undertake experiments with companies to test how a digital pound could work in the real world," the consultation response said. "We are also committing to further public consultation prior to legislation being introduced."

UPDATE(Jan 25 14:28 UTC): Adds detail from the consultation response throughout.

Edited by Sandali Handagama.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.