Futures

Bank of England Proposes Digital Pound: A Consultation on Future Currency Needs, (from page 20220212.)

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Themes

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Summary

The Bank of England and HM Treasury have published a Consultation Paper assessing the need for a retail central bank digital currency (CBDC), referred to as the ‘digital pound.’ While it is too early to decide on its introduction, preparatory work is deemed necessary. The proposed digital pound would function as a new form of sterling, akin to a digital banknote, facilitating everyday transactions for households and businesses, both online and in-store. It would coexist with cash and bank deposits, ensuring public access to retail central bank money and promoting innovation in domestic payments. The consultation seeks feedback from the public and stakeholders until June 7, 2023, to guide future developments regarding the digital pound.

Signals

name description change 10-year driving-force relevancy
Emergence of Digital Currency A potential shift towards a retail central bank digital currency (CBDC), the digital pound. Transitioning from cash and traditional bank deposits to a digital currency model. In 10 years, digital currencies may become the primary form of transaction, reducing cash usage significantly. The increasing digitization of lifestyles and the need for efficient, innovative payment methods. 4
Public Engagement in Financial Innovation Extensive stakeholder engagement on the proposed digital pound model. From top-down financial decisions to inclusive public consultations regarding money usage. In 10 years, public input may shape financial policies and innovations more significantly. The growing demand for transparency and community involvement in financial decisions. 3
Shift in Payment Preferences The digital pound aims to cater to evolving payment needs of households and businesses. Moving from physical cash to a digital payment landscape. In 10 years, most transactions could be conducted digitally, with cash becoming rare. Consumer preferences shifting towards convenience and speed in transactions. 4
Innovation in Domestic Payments The digital pound could promote innovation and efficiency in how payments are made. From traditional payment methods to innovative digital solutions for transactions. In 10 years, payment methods may be revolutionized, integrating advanced technologies like blockchain. The necessity for efficiency and modernization in the financial sector. 5

Concerns

name description relevancy
Privacy and Surveillance The implementation of a digital currency could lead to increased government surveillance of individual financial transactions, raising privacy concerns. 4
Cybersecurity Risks A digital currency could be vulnerable to cyber attacks, which could jeopardize personal and national financial security. 5
Financial Inclusion The transition to a digital pound may exclude those without access to digital technology, impacting financial inclusion for vulnerable populations. 5
Monetary Policy Implications The introduction of a digital currency could alter the effectiveness of monetary policy and create new economic challenges. 4
Technological Dependence Increased reliance on digital payments could raise concerns over technological failures and system outages that disrupt economies. 4
Consumer Behavior Changes The adoption of a digital currency may change consumer behavior and spending habits in unpredictable ways, affecting the economy. 3

Behaviors

name description relevancy
Adoption of Digital Currency Increased interest and potential adoption of a retail central bank digital currency (CBDC) by the public and businesses. 5
Shift to Digital Payments A move towards digital payments for everyday transactions, reflecting a change in consumer behavior and preferences. 5
Public Consultation Engagement Engagement with various stakeholders, including the public, to gather feedback on the proposed digital pound initiative. 4
Innovation in Payment Methods Encouragement of innovation and efficiency in domestic payment systems through the introduction of a digital currency. 4
Integration with Existing Payment Systems The digital pound being designed to coexist and integrate with cash and traditional bank deposits. 4

Technologies

description relevancy src
A digital form of currency issued by a central bank, designed for everyday transactions by households and businesses. 5 86f9d4e0a40048c3cbab66ba00b2fcb5
A proposed digital currency in the UK, intended to function like a digital banknote for various payment needs. 5 86f9d4e0a40048c3cbab66ba00b2fcb5
Technological advancements aimed at improving efficiency and choice in domestic payment systems. 4 86f9d4e0a40048c3cbab66ba00b2fcb5

Issues

name description relevancy
Digital Currency Adoption The potential widespread adoption of a retail central bank digital currency in the UK, impacting everyday financial transactions. 5
Impact on Traditional Banking The introduction of a digital pound may disrupt traditional banking models and practices, requiring adaptations from financial institutions. 4
Financial Innovation and Efficiency A digital pound could drive innovation in payment systems, potentially leading to more efficient financial transactions. 4
Public Engagement in Financial Policy The need for public consultation and engagement in the development of new financial technologies and currencies. 3
Digital Economy Transition The shift towards a more digital economy, necessitating new forms of currency and payment methods like CBDCs. 5
Regulatory Framework for CBDCs The requirement for a robust regulatory framework to govern the use and implementation of digital currencies. 4
Security and Privacy Concerns Emerging concerns regarding the security and privacy of transactions made with a central bank digital currency. 5
Socioeconomic Implications of Digital Currency Potential socioeconomic impacts of introducing a digital currency, including access and equality issues. 4