The Bank of England and HM Treasury began formally considering a national digital currency in 2021, launching a joint taskforce to explore what’s now called the digital pound. A full consultation followed in 2023, and by 2024, the government confirmed public backing to keep developing the idea without committing to a rollout.
As of 2025, the project is still in its design phase, testing technology and policy through a Digital Pound Lab. A final decision isn’t expected before 2026, and rollout if approved would come in the late 2020s. Growing privacy, security, and cost concerns may yet stall or reshape the project’s direction (see Bank of England: The Digital Pound).
What Is a Digital Pound?
A digital pound would be the direct digital equivalent of a banknote. It is not a new currency but a secure, digital way to hold and use sterling. It would exist alongside, not replace, physical cash and commercial bank deposits.
It’s often mistaken for cryptocurrency simply because both are digital, yet only the digital pound would carry the full backing of the Bank of England.
Whilst both are digital, the digital pound and cryptocurrencies are very different:
| Feature | Digital Pound (CBDC) | Cryptocurrency (e.g., Bitcoin) |
|---|---|---|
|
Issuer |
Bank of England |
Decentralised network |
|
Value |
Always worth £1 |
Highly Volatile |
|
Control |
Centralised by UK authorities |
No single authority |
|
Use |
Every day, buying and selling |
Mostly for speculation |
A defining feature is that the digital pound would be “public money”, issued and guaranteed by the Bank of England, offering the same safety and trust as cash (see House of Commons Library report).
Why Is the UK Exploring a Digital Pound?
The project responds to three major trends:
- Declining cash use: Fewer people are using physical currency, so the Bank of England wants to maintain a public, risk-free form of money.
- Rise of private digital currencies: A state-backed digital pound ensures secure alternatives to corporate digital money.
- Need for innovation: The Bank’s infrastructure allows fintech firms to build new payment services.
The Debate: The Pros and the Cons
Pros: The digital pound could make payments faster and more efficient for businesses and consumers. It would help people without bank accounts access money safely. It could also encourage new ideas and products in the fintech industry.
Cons: The digital pound could increase government oversight of transactions, raising privacy concerns. It may also shift funds away from commercial banks, affecting their lending. These factors could influence the stability of the financial system.
A Strategic Move
Digital payments are rapidly increasing worldwide. Central banks in China, the EU, and other regions are testing their own digital currencies.
For the UK, a digital pound could reinforce its role as a global financial leader, safeguard currency stability, and position the country at the forefront of financial innovation.
What’s Next?
No final decision has been made. The project remains in the design and discussion phase, and a launch could be years away. Legislation and input from financial institutions will determine the timeline.
Are You Ready for the Digital Pound?
The digital pound will bring changes to how businesses operate, the rules they follow, and their overall strategy. Currently in a multi-year design phase, it represents the UK’s push to remain a global leader in finance and technology.
Its full impact is still years away, but waiting until launch to understand it would be a missed opportunity. Forward-thinking business leaders and investors can get ahead of the curve now.
Legend Financial equips clients to navigate the digital pound with insights, portfolio impact analysis, and future-proofing strategies. Stay informed, act decisively, and maintain your competitive edge. Book a free consultation today!
