Digital pound plans backed by Innovate Finance and fintech industry
Innovate Finance and leading fintech industry players have given support to the digital pound, claiming it will boost innovation and cement the UK as a global payments leader.
The Bank of England and HM Treasury have both claimed that there is ‘likely to be a future need for’ a digital pound or Central Bank Digital Currency (CBDC) as the UK battles for financial stability.
Director of policy at Innovate Finance, Adam Jackson, said a digital pound would ‘reinforce the UK’s position as a global leader in payments’ and that the industry body ‘strongly supports’ the introduction of a digital pound.
If introduced, the digital pound would be a new type of digital currency issued by the Bank of England that could be used online or in-store to make payments.
Khalid Talukder, co-founder of DKK Partners, commented: “International trade and overseas relationships will play a pivotal role in the growth of the UK economy, and access to a digital currency that can facilitate quick payments at low cost is an exciting proposition for businesses. The technological innovations for CBDC can help to promote financial inclusion within the UK, and with global collaboration can be extended to reach new regions and emerging markets that are crying out for payment systems. Boosting business confidence in foreign exchange trading is an essential step in growing the global business landscape, and it is positive to see the Bank of England and industry innovating in this area.”
The digital pound would be in sterling its value would be stable in the equivalent of a banknote. However, the digital pound would not replace cash.
Professor Davie Skeie, Gillmore Centre for Financial Technology, said: “CBDC has a role to play in the UK FinTech space, representing an opportunity for innovation as the Bank of England and regulatory bodies road map what a CBDC future looks like. Using a common technology can allow faster and cheaper payments, including overseas, beyond the current uses of blockchain, supporting growth across sectors both in the UK and internationally.”
“However, research centres have a significant part to play in the development of a CBDC as there are still many question marks over its design, which will have enormous implications. The other consideration is digital access. A digital currency may provide increased access for some for the millions without the capacity to utilise current digital wallets.”
HM Treasury and the Bank of England closed a consultation on the digital pound in June, mapping out key features for the currency. A final decision on whether a digital pound will be formally introduced is expected to be made in 2025.
