For many, a ‘digital pound’ is an exciting prospect. However, a number of constituents have contacted me to raise their concerns regarding the UK’s CBDC proposals, particularly with regards to human rights and privacy.
As constituents may be aware, the Bank of England and HM Treasury have been exploring the concept of a UK retail CBDC or ‘digital pound’. A digital pound would be a new form of digital money for use by households and businesses for their everyday payment needs, and a complement to physical cash and other means of payment. I understand that no decision has yet been made to build or issue a digital pound, either for corporates or for the public. However, given changes in money and payments, as well as developments in other countries, I believe there is merit in further preparatory work.
The Bank of England and HM Treasury Consultation Paper sought feedback from the public on a set of design proposals for the digital pound. Respondents from a range of industries and organisations were supportive of the design proposition set out in the Consultation Paper, while many other respondents raised concerns about the implications of a digital pound for access to cash, users’ privacy, and control of their money.
The consultation response sets out the steps that the Government and Bank of England are taking to reinforce public trust in the design of a digital pound before any decision is made. Furthermore, a digital pound would only be introduced once Parliament has passed the relevant legislation, prior to which a further consultation exercise would be held. Privacy, and preventing government programmability, would be a core design feature of the digital pound issued by the Bank of England, and neither the Government nor the Bank of England would access users’ personal data. Moreover, as you may be aware, the previous Government legislated to safeguard access to cash, ensuring that it would remain available even if a digital pound was introduced.
The digital pound would be a complement to cash and not a replacement for it and I welcome that the last Government legislated to protect access to cash and ensure that the UK cash infrastructure remains sustainable.
Financial inclusion means that everyone, regardless of their background or income, has access to useful and affordable financial products and services such as banking, payment services, credit, insurance, and the use of financial technology. I would like to reassure you that tackling financial exclusion, particularly as financial services become more digital, is a priority for me. Currently, levels of financial inclusion in the UK are high compared to many of our international counterparts.
Regarding programmability, the Consultation Paper emphasised that neither the Bank of England nor the Government would program users’ money by embedding rules on how or when they could spend it. The purpose of a digital pound would be to provide the public with an additional means of accessing central bank money in a landscape of increasingly digital payments; this would not come at the expense of users’ control of their spending. The Bank and HM Treasury are committed to continuing to discuss concerns around programmability with the public, industry, and Parliament.
In January 2025 the Bank of England put out an update statement that emphasised that no decision has been made on whether to proceed with a digital pound and that the design phase will take another couple of years at which time the Bank and the Government will assess the policy case for a digital pound and determine whether or not to proceed. If the digital pound were to proceed, it would require primary legislation and come with safeguards on users privacy and restrictions on the ability of the Bank of Government to control how households or businesses use their money.
I would like to reassure you that the Opposition will continue to engage with the Bank of England and HM Treasury as they develop proposals for a digital pound and I have ensured Ministers are aware of the human rights concerns you raise.
