The Bank of England (BOE) is reportedly re-evaluating its plans to launch a digital pound, as global attention increasingly shifts toward stablecoins. While no final decision has been made, the project remains in its ongoing “design phase,” according to a recent Bloomberg report.
The BOE’s priorities appear to have shifted significantly from just a few years ago, when officials openly discussed the potential need for a central bank digital currency (CBDC). Now, sources familiar with the matter suggest the BOE is encouraging banks to focus on broader payment innovations that could deliver similar benefits to consumers without necessarily requiring a state-issued digital currency.
Bank of England Governor Andrew Bailey has publicly expressed skepticism about the necessity of a retail CBDC. Instead, he has urged banks to explore tokenized deposits—a system that some experts believe could serve as a more stable bridge between traditional finance and decentralized finance.
In remarks made in June, Bailey said he remains unconvinced that there is a need to “create new forms of money.” While he still supports the idea of a wholesale CBDC for interbank transactions, he has shown less enthusiasm for one designed for everyday consumer use.
Adding to the uncertainty, internal research from BOE staff has found that the potential benefits of a digital pound have diminished. This shift in outlook is also reflected in the fact that several senior officials have stepped back from leading the committee tasked with evaluating the project.
Bloomberg noted that the Bank of England declined to comment on its report.
Bank of England Remains Cautious Amid Rise of Stablecoins
While the Bank of England (BOE) is considering putting its central bank digital currency (CBDC) project on hold, it doesn’t signal a full embrace of stablecoins either.
Earlier this month, BOE Governor Andrew Bailey cautioned against the rising dominance of stablecoins, highlighting the lack of consumer protections and safeguards that traditional bank deposits provide. He also warned of the potential for stablecoins to overshadow fiat currencies if left unchecked.
Bailey emphasized the possible systemic risks posed by stablecoins to financial stability, noting that without proper regulation, they could undermine the very concept of money.
“We are going to have to look at it very closely through that lens. It’s both a financial stability issue and a money issue in that sense,” he said.
The BOE’s cautious stance contrasts with the approach taken by other nations. In the U.S., the Trump Administration has shelved its CBDC efforts, citing similar concerns over financial stability. South Korea has also paused its digital currency pilot program, opting for a wait-and-see approach.
