At sea level, one US liquid pint of water weighs 1.04318 pounds (16.6909 oz), which gives rise to a popular saying: “A pint’s a pound, the world around.”
While the recent bank failures of Silicon Valley Bank and Signature Bank have many US congressmen and citizens wondering about the future of cryptocurrencies, across the pond, the Bank of England is soliciting input into the possibilities of issuing a digital pound.
The digital pound would be a British Central Bank Digital Currency (“CBDC”). Referred to as the digital pound by the Bank of England, the press has also dubbed this venture as the “digital sterling,” as well as “Britcoin.”
What is Intended
The Bank of England has publicly declared the digital pound would be exactly equivalent and exchangeable for fiat currency, and that both fiat pounds and digital pounds would be used for day-to-day spending and usable in-store or making payments. Want to get your beans and eggs with your morning brew at your local stand before hopping on the tube? You’ll be able to hand over a 5-pound note just as you do now, or, once introduced, pay with the balance of digital pounds of sterling on your cell phone.
As people continue to evolve away from using cash, and digital payments become more common, the Bank of England and His Majesty’s Treasury foresee a need for and benefits from a digital pound. This is because the way people pay for things is changing. People are not using cash as much as they used to, and digital payments are becoming more common.
In light of this long-term trend, the Bank of England and HM Treasury anticipate there is likely to be a future need for, and benefits from, a digital pound. While remaining backed by the government and thereby not posing users with the default risk of private digital money, a digital pound could also serve to spur innovation in the marketplace and improve the options people have for making payments. The proposed digital pound model being proposed by the Bank of England would enable private companies to innovate, make payments more efficient, and give consumers more choice.
Timing of Digital Pound
No need to throw away your pound notes yet. The Bank of England has a 3-year design phase, including technology and policy requirements, for the digital pound. Only then, if the government concludes that a case for digital pound has been made, will the Bank of England move to a build phase. That phase, which has not even been scheduled yet, would mean that the earliest date that a digital pound could be issued would be late this decade.
Publicly Available “Britcoin” Resources to Review
The Bank of England and His Majesty’s Treasury have made publicly available a consultation paper that explores the need for a digital pound and proposes a set of design choices, that readers may access here:
The digital pound: A new form of money for households and businesses? | Bank of England
In addition, the Bank of England has published an online technology paper looking at the technical aspects of the model under consideration including performance, security (hack-proof would seem obvious), resilience (people need to make and accept payments during war, drought, and blackouts), and energy use. That paper is available for readers of this blog here:
The digital pound: Technology Working Paper | Bank of England
Contacting the Bank of England
Readers of this blog are strongly encouraged to read both papers linked above, and once they have finalized their informed opinion, to contact the Bank of England prior to the deadline of June 7, 2023.
Comments may be provided via postal mail (yes, the irony of making your thoughts known on a digital currency via snail mail is not lost on us) at:
Digital Pound Consultation
CBDC Unit
Bank of England
Threadneedle Street
London
EC2R 8AH
Email submissions can also be submitted to: digitalpoundconsultation2023@bankofengland.co.uk
Comments on the technology paper may be made via email to: CBDC@bankofengland.co.uk
Contributing Authors: Carl Aridas, Project Manager, and Ryan Scruby, Project Manager
