The <a href="https://www.thenationalnews.com/business/economy/2023/01/09/bank-of-england-warns-of-persistent-inflation-and-higher-interest-rates/" target="_blank">Bank of England</a> and Treasury have set out a plan to introduce a new central bank currency, including a new state-backed “digital pound” that could be launched this decade. A consultation on the digital currency will be launched by the Bank and Treasury on Tuesday. The new digital pound would be issued by the Bank of England and is “likely to be needed in the future” as use of <a href="https://www.thenationalnews.com/tags/cash/" target="_blank">cash</a> and cards continues to change. But the consultation and research process does not mean the central bank digital currency will definitely be issued, with the decision due to be made later. There have been years of speculation that the currency could be considered amid the rapid growth of new digital financial formats, such as cryptocurrencies and stablecoins. The Treasury has stressed that the potential currency is not a crypto asset, which are privately backed investments. <a href="https://www.thenationalnews.com/tags/rishi-sunak" target="_blank">Prime Minister Rishi Sunak</a> asked the Bank of England to look into the case for a bank-backed currency in 2021 when he was chancellor. In October, Mr Sunak’s Financial Services Minister Andrew Griffith warned that a long delay in issuing a digital pound could create problems for the <a href="https://www.thenationalnews.com/tags/economy" target="_blank">economy</a>. “While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible and easy to use," said Chancellor Jeremy Hunt. “That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.” The Bank of England will conduct more research and development work while the public is invited to take part in the consultation process. The Bank and the Treasury said the currency would not dramatically alter how British people use money. But the they believe it could help to “ensure the public have access to safe money that is convenient to use as our everyday lives become more digital”. The consultation is due to take about four months. It is understood that the design phase is then likely to continue until at least 2025, from which time a final decision could be made. If it gets approval, there would then be significant investment to launch the currency, which could take place during the latter half of this decade. The currency would be issued and held by the Bank of England, but intermediaries, such as consumer banks or other businesses, would be needed for people to spend it. There are likely to be initial restrictions on how much of the currency any individual or business could hold. “As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow," said Andrew Bailey, Governor of the Bank of England. “A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability. “However, there are a number of implications that our technical work will need to carefully consider. “This consultation and the further work the bank will now do will be the foundation for what would be a profound decision for the country on the way we use money.” Countries around the world, including the US and China, and the eurozone, are also considering similar proposals. “We fully support the Bank of England’s work exploring the potential benefits of a safe and stable CBDC," said Tulip Siddiq, Labour’s shadow city minister. “This is a welcome contrast to the <a href="https://www.thenationalnews.com/tags/conservative-party/" target="_blank">Conservative</a> government’s promotion of the crypto wild west, which has put millions of people’s savings at risk.”
