UK's Bank of England launches digital pound project as 'new form' of money

Quick Take

  • The UK’s central bank launched its long-awaited digital pound project, pitching the potential to create a new payment system and form of money.
  • The currency would be issued solely by the central bank, with households and businesses able to hold it in a digital wallet accessible via smartphones or cards.

The Bank of England, the UK's central bank, launched its long-awaited digital pound project, pitching the potential to create a new payment system and form of money. 

The potential digital currency would be issued solely by the central bank, with households and businesses able to hold the currency in a digital wallet accessible via smartphones or cards, a consultation document published on Tuesday said. 

''A UK central bank digital currency – a ‘digital pound’ – would be a new form of digital money for use by households and businesses for their everyday payments needs," Chancellor of the Exchequer Jeremy Hunt, and Bank of England Governor Andrew Bailey said in a statement. 

The project's announcement comes a week after the UK government unveiled a new regulatory regime for licensing crypto service providers and builds on Prime Minister Rishi Sunak's ambition to center the country as a crypto and fintech hub. Even so, the UK lags behind its Euro zone neighbors where work on a central bank digital currency is well advanced, despite the fact that the EU has not yet committed to a rollout. A final decision on whether to move forward with implementation of a digital euro is expected in October.

There will also be challenges to convince the finance sector of the need for a new payments option. Bailey himself voiced skepticism about the need for a household-focused digital currency when speaking last mo