The Bank of England has published its latest progress update on the digital pound, offering the clearest signal yet of how the UK is approaching a central bank digital currency (CBDC): deliberately, defensively, and with trust placed firmly ahead of speed.
The update confirms that the digital pound remains in the design and assessment phase, with no decision yet taken on whether to proceed to build or launch. Any such decision will be made jointly with HM Treasury, with a formal go/no-go point expected in 2026. Should the project advance, implementation would require primary legislation passed by Parliament.
Throughout the process, the Bank has placed particular emphasis on transparency and consultation, seeking to reassure the public and preserve trust as it evaluates whether a digital pound is necessary, desirable, and workable for the UK economy.
Designing money, not just technology
At this stage, the Bank is focused less on technology deployment and more on system design. Central to its thinking is what it repeatedly describes as a “platform model.” Under this approach, the Bank of England would issue and manage the digital pound as a public form of money, while the private sector—banks, fintechs, and payment providers—would deliver wallets, interfaces, and customer-facing services.
This intermediated structure is not accidental. It reflects two clear priorities: avoiding the disintermediation of commercial banks, and ensuring that innovation remains anchored in competitive private markets. In effect, the Bank is signalling that it wants to operate the rails, not own the user experience.
To explore how this could work in practice, the Bank has expanded activity through the Digital Pound Lab, an industry sandbox that allows private firms to test potential use cases, business models, and technical integrations. Importantly, no real money is involved. This phase is about architecture and governance, not live settlement.
Privacy by law, not by promise
If there is one theme the Bank returns to consistently, it is privacy. The progress update reiterates that neither the Bank of England nor the government would have access to users’ personal transaction data. Any digital pound would be designed with strict data minimisation and a clear separation of roles between the central bank and payment interface providers.
At the same time, the Bank is explicit that a digital pound would not be anonymous. Like existing digital payments, it would need to comply with anti-money laundering and counter-terrorist financing requirements. The distinction the Bank draws is subtle but important: privacy is about control and limitation of data use, not invisibility.
To reinforce this point, the Bank states that any move forward would require legislation explicitly setting out privacy protections in law. Trust, in the Bank’s view, must be statutory—not contractual, and certainly not implied.
Why the Bank is taking its time
The cautious tone reflects broader uncertainty about the role of retail CBDCs in advanced economies. Cash use in the UK is declining sharply—UK Finance data shows cash accounted for around 9% of transactions in 2024, down dramatically from levels seen just a few years ago—but it has not disappeared entirely.
At the same time, private digital money is advancing quickly. Stablecoins, tokenised deposits, and on-chain funds are moving from pilots to production without waiting for central banks to catch up.
Against this backdrop, the Bank’s concern is less about missing the innovation cycle and more about monetary sovereignty, resilience, and public confidence. The digital pound is being positioned as a potential complement to cash and commercial bank deposits, not a replacement for either. It is also framed as a contingency: a public option for digital money should private systems fail, fragment, or concentrate too much power.
Implications for the digital asset ecosystem
The message for the market is clear: the UK is not rushing into a retail CBDC arms race. Instead, the Bank of England is watching how tokenisation, stablecoins, and wholesale on-chain settlement evolve—and designing optionality rather than inevitability.
If it is launched, the digital pound is likely to arrive later in the decade, tightly governed and intentionally boring. It will not look like crypto. It will almost certainly be built to interoperate with a financial system where tokenised assets and programmable money already exist.
That restraint may frustrate innovators. But from the Bank’s perspective, money is critical infrastructure.
Bottom line
The digital pound is progressing—but strictly on the UK’s terms. It is being shaped as a public trust instrument in a world increasingly dominated by private digital money. Whether it is ever launched will depend less on technology readiness and more on politics, public confidence, and whether existing payment systems continue to deliver resilience and choice.
The UK would rather get digital money right than get it first.
Sources:
https://www.bankofengland.co.uk/report/2025/digital-pound-progress-update
