If launched, the digital pound could help households and businesses to make both in-store and online payments. Credit: stevepb from Pixabay.

Bank of England, along with the UK Treasury, has unveiled a formal consultation for possibly introducing a digital pound or central bank digital currency (CBDC) in the country.

The consultation, which is open until 7 June 2023, has been supervised by the joint Bank-HM Treasury CBDC Taskforce that was revealed in April 2021.

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Following the completion of the process, work on the ‘design phase’ of the digital pound will be initiated. During this phase, the technology and policy needed for a digital pound will be analysed.

If finalised, Bank of England will issue the digital pound that would enable households and businesses to make both in-store and online payments on a daily basis.

The virtual currency will complement cash. Like digital banknote, it can also be used in place of cash and bank deposits.

Bank of England governor Andrew Bailey said: “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. A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.

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“However, there are a number implications which 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.”

In addition, Bank of England and the UK Treasury have published a technical working paper to look after the technical requirements and examine various designing aspects of the digital pound.