The Bank of England is reconsidering its plans for a digital pound amid increasing skepticism about its benefits. According to sources cited by Bloomberg, the central bank is privately encouraging the banking sector to advance payment innovations that may offer similar advantages without the need for a central bank digital currency (CBDC).
These sources indicate that the Bank of England aims to be prepared to launch a CBDC if warranted but is open to stepping back if private entities continue developing new electronic payment technologies. The Bank’s staff believe the potential benefits of introducing a digital pound have diminished.
In January, the Bank announced plans to establish a Digital Pound Lab to outline the design phase for a future digital currency. At that time, the Bank stated that no decisions had been made regarding the construction of a digital pound. The design phase is not indicative of final policy or proposals, and these will be evaluated once the phase is completed and broader payment developments are considered.
Governor Andrew Bailey reiterated this cautious stance in a recent appearance before the Treasury Select Committee, suggesting that private sector initiatives could yield significant benefits: “If that’s a success, I question why we need to introduce a new form of money.”
This perspective sharply contrasts with the European Central Bank’s approach, which is accelerating efforts on a digital euro. The ECB responds to EU leaders’ urgency to reduce dependence on Visa and Mastercard, especially given the geopolitical climate.
The ECB’s third progress report on CBDC preparations recognizes the intensified call from European leaders. Executive board member Piero Cipollone expressed satisfaction with the progress, stating the necessity of an ambitious legislative pace in light of current challenges.
Meanwhile, in the US, the House of Representatives has passed the ‘Anti-CBDC Surveillance State Act’ in response to an executive order from Donald Trump. This order prohibits any government actions to develop CBDCs and obliges an end to existing initiatives.
The American Bankers Association supports the bill, arguing that a CBDC is unnecessary in the US and poses risks to the financial system: "Issuance of a CBDC would fundamentally change the relationship between citizens and the Federal Reserve and undermine the important role banks play in extending credit." They urge swift Senate action to pass similar legislation introduced by Senator Ted Cruz to safeguard the economy and financial system.