The Bank of England (BoE) and His Majesty’s Treasury have released a 116-page consultation paper on the proposed digital pound, which is expected to be called “Britcoin.” The release of the paper brings the UK closer to launching a Central Bank Digital Currency (CBDC). A technology working paper was also released, providing insights into the technical and economic design considerations.
The consultation paper outlines that the digital pound can co-exist with private stablecoins in a “mixed payments economy,” much like how cash exists alongside private money. The primary motivation behind launching the digital pound is to ensure the central bank money remains a source of confidence and safety in the monetary system and to promote innovation and efficiency in domestic payments. To achieve this, the e-GBP would need to be adopted through public-private partnerships.
The paper explains that the platform would be built with the help of the private sector, but would impose individual holding limits between $12,000 and $24,000 to prevent its use as a savings account. The paper acknowledges privacy concerns but states that the e-GBP will be subject to rigorous standards of privacy and data protection. Transactions will be recorded anonymously on the core ledger, and users will have at least some level of privacy.
The paper also outlines the potential impact of the digital pound on the business models of commercialized banks through “bank disintermediation” and the possibility of it bringing about more financial inclusivity among the UK population.
Meta description: The Bank of England and His Majesty’s Treasury have released a 116-page consultation paper on the proposed digital pound, which is expected to bring the UK closer to launching a Central Bank Digital Currency (CBDC). The paper outlines the co-existence of digital pound and stablecoins and the potential impact on the monetary system and financial inclusivity.