The Digital Pound - Still on the Table But Far from Certain

19th October 2025

More than four years after the idea of a "digital pound" first entered public debate the Bank of England (BoE) and HM Treasury remain cautious about whether the United Kingdom truly needs to introduce a central-bank digital currency.

Although the project is still alive, officials are now striking an increasingly sceptical tone, suggesting that a launch is far from guaranteed and may ultimately depend on how quickly private-sector payment systems evolve.

The Bank of England and the Treasury are currently in what they call the design phase of the project — a detailed research and planning effort examining the technology, policy implications, and business models that would underpin a potential UK digital currency.

This phase is exploring technical questions such as how the currency might function offline, what role private payment providers would play in distributing it, and how it would integrate with existing financial infrastructure. The central bank has created a "Digital Pound Lab," a sandbox environment for experiments and collaboration with fintech firms.

Despite this ongoing work, the Bank has repeatedly stressed that no decision has yet been made to proceed with issuing a digital pound. Officials have stated that a retail central-bank digital currency would only be introduced if there were a strong policy case, clear benefits for consumers and businesses, and no unacceptable risks to financial stability.

Even if a decision were taken to move forward, the introduction of a digital pound would require primary legislation from Parliament, meaning no rollout could occur without explicit political approval.

In its most recent progress report, published in early 2025, the Bank reaffirmed that the design phase would likely continue into the middle of the decade. Only after that stage would the BoE and Treasury make a decision on whether to proceed with a full build-out.

Should that happen, the subsequent phases — legislative approval, technological development, and pilot testing — could take several years. The Bank's website still refers to the “second half of this decade” as the earliest possible timeframe for issuance, suggesting that a live digital pound would not appear before 2027 at the very earliest.

Recent statements from senior officials illustrate the tone of caution. Governor Andrew Bailey said in June 2025 that he remained “to be convinced” that the United Kingdom needed to create new forms of money such as a retail central-bank digital currency. He acknowledged that the UK was already making significant progress in developing wholesale forms of digital money for banks and institutions, but indicated that the case for a retail CBDC — one available to the public — was less clear.

His remarks echoed a growing sentiment inside the Bank that the benefits of a digital pound must clearly outweigh the costs and operational complexities.

Bailey has also turned attention toward stablecoins, privately issued digital assets pegged to the pound or other currencies. In October 2025, he argued that widely used stablecoins in the UK “should be regulated like money” and have access to certain central-bank facilities. That statement hinted that the Bank may increasingly prefer to shape the future of payments through regulation of private digital currencies, rather than by creating its own.

Reports in the financial press during mid-2025 reinforced this impression. Several outlets suggested that the Bank might be “rethinking” or even “pausing” elements of the retail-CBDC project, reflecting both the rapid pace of innovation in private digital payments and lingering doubts about whether a state-issued alternative is necessary.

Nevertheless, official documents make clear that preparatory work is continuing. The BoE's technical teams are still studying offline functionality, interoperability, cybersecurity, and the potential roles of intermediaries such as commercial banks and fintech providers.

Policymakers also face broader questions about the role of money in a digital economy. A digital pound would represent a new public form of money, potentially giving individuals and businesses a risk-free way to hold funds directly backed by the central bank.

Supporters argue that this could enhance resilience and competition in payments. Critics, however, warn that it could disintermediate banks or raise privacy concerns if transactions were traceable by the state. The BoE has promised that any digital pound would be designed to preserve privacy and complement, not replace, cash and existing bank deposits.

In reality, the digital-pound debate has become a reflection of wider global uncertainty about retail central-bank digital currencies. Other jurisdictions — such as the European Central Bank with its proposed digital euro — are at similar stages of exploration. Yet enthusiasm has cooled in several countries as authorities grapple with the high costs and mixed evidence of consumer demand.

For now, the United Kingdom’s approach appears to be one of strategic patience. The Bank of England continues to invest in research and design but shows no appetite for rushing into issuance. Its officials repeatedly emphasise that the project remains “under review,” and the decision will hinge on developments in private-sector innovation and the broader payments landscape.

If existing technologies such as regulated stablecoins and tokenised bank deposits deliver the same benefits more efficiently, the digital pound may remain a blueprint rather than a reality.

In short, as 2025 draws to a close, the digital pound is still very much on the table — but it is a cautious, conditional possibility rather than a foregone conclusion. The Bank of England’s next major update, expected in 2026, will likely reveal whether Britain is inching closer to a new era of digital central-bank money, or quietly stepping back from the idea altogether.