Bank of England officials are considering abandoning plans to create a digital pound for households amid growing skepticism about the project’s benefits.
The BOE has privately urged the banking industry to accelerate payment innovations that could deliver similar benefits without the need for a central bank digital currency for consumers.
Digital Currency or Nothing, Not Even Bitcoin
According to Bloomberg, Governor Andrew Bailey told Parliament Tuesday that “if the work with commercial banks is successful, I would need a lot of convincing” on the need for Britcoin.
The central bank’s retreat from its previously supportive stance follows its expenditure of £24 million on research and development since 2021.
It came amid over 50,000 public consultation responses and resistance from lawmakers, privacy advocates, and conspiracy theory groups concerned about government surveillance of financial transactions.
Bailey’s preference for tokenized bank deposits over CBDCs aligns with his concerns about stablecoins taking “money out of the banking system” and the “credit creation world.”
The governor advocates digitizing existing bank deposits rather than creating new forms of state-backed money for consumers.
The shift occurs as global CBDC enthusiasm wanes, with the Trump administration blocking further U.S. work with the GENIUS Act, and South Korea halting its digital currency pilot program.
Only the European Central Bank continues advancing its digital euro project among major economies.
Project Faces Mounting Criticism and Technical Challenges
Former Bank of England economist Neil Record has previously described the digital pound initiative as a “white elephant,” driven by the Bank’s financial interests rather than consumer needs.
Critics argue that no compelling justification exists for the project, despite substantial taxpayer investment over the past three years.
The Bank’s primary income derives from interest foregone by physical currency holders, and declining cash usage threatens this economic model.
Cash payments dropped from 51% in 2013 to just 12% in 2023, prompting concerns that the Bank seeks digital currency relevance as physical money becomes obsolete.
Privacy concerns intensify opposition as the proposed digital pound offers no interest payments and appears redundant compared to the existing banking infrastructure.
Commercial banks already provide digital payment services, interest-bearing accounts, and financial security for deposits under £85,000 through established frameworks.
Over 50,000 consultation responses highlighted privacy fears and potential destabilizing impacts if investors flooded state-backed digital currencies during crises, siphoning funds from other financial sectors.
Lord Forsyth criticized the initiative as “a solution in search of a problem,” given the massive expenditure without clear benefits.
Recent BOE research found diminishing benefits from CBDC launches as consumers increasingly adopt existing online payment technologies.
Regulatory Focus Shifts to Stablecoin Oversight and Bank Restrictions
Bailey emphasized the significant systemic risks associated with banks issuing private stablecoins, preferring regulated tokenized deposits that align with existing banking practices.
The governor warned stablecoin proliferation could undermine sovereign monetary control and fragment financial systems without proper oversight.
The BOE is implementing Basel Committee standards restricting UK banks’ crypto exposure to 1% of investments by 2026.
Executive Director David Bailey described the upcoming rules as “restrictive,” encouraging banks to maintain minimal cryptocurrency exposure due to heightened risks of price volatility.
The Financial Conduct Authority advances its “gateway regime” authorization framework for crypto companies by 2026, while finalizing regulatory structures for stablecoins and crypto custody services.
The UK is coming up with more crypto rules that would be on the "restrictive end," encouraging banks to keep low exposure to crypto.#BankofEngland #CryptoExposurehttps://t.co/fAcnbzeDoh
— Cryptonews.com (@cryptonews) June 19, 2025
The regulator is seeking public input on its plans for regulating stablecoins as the adoption of digital assets accelerates.
Bailey cautioned that emerging digital money forms could disrupt financial trust if left unregulated, requiring careful monitoring of their effects on monetary unity and the “singleness of money.”
He questioned the role of reserve currencies in systems where payment technologies bypass traditional oversight mechanisms.
The stablecoin market grew from $125 billion to $255 billion in under two years, prompting regulatory concerns about the potential for fragmented monetary systems.
The central bank maintains the capability to launch CBDCs if warranted, but prioritizes private sector payment innovations over state-backed alternatives.
The approach marks a significant retreat from 2021 positions when officials considered digital pounds “likely” necessary for future monetary systems.
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