BOE Governor’s Digital Pound Doubts Could Derail UK’s CBDC Ambitions as Global Race Heats Up

Britain's central bank chief just threw cold water on the digital pound—and the timing couldn't be worse.

As China's e-CNY gains traction and the ECB tests digital euro prototypes, Threadneedle Street's hesitation risks leaving the UK in the monetary stone age. The BOE governor's skepticism echoes through Whitehall like a pensioner muttering about 'bloody blockchain'.

Behind the scenes: Whitehall insiders whisper about interdepartmental turf wars delaying technical specifications. Meanwhile, commercial banks lobby against disintermediation—because nothing terrifies legacy finance like cutting out middlemen.

The irony? This foot-dragging comes as 94% of central banks explore CBDCs (per BIS data), with nine jurisdictions already live. The UK's 'wait-and-see' approach looks increasingly like 'miss-and-weep'.

One Whitehall wag joked they'll launch the digital pound just in time for the next financial crisis—because nothing says 'monetary innovation' like playing catch-up during a liquidity scramble.

Bailey Casts Doubt on Digital Pound for Public

“I start with the presumption that there should be benefit here—it seems like a failure of imagination if we think otherwise,” said Bailey. “That said, I remain to be convinced that we need to create new forms of money—such as Central Bank Retail Digital Currency—to achieve this.”

The comments come as the UK central bank continues to evaluate the design of a retail-focused digital currency. Alongside the Treasury, it has not yet committed to a full rollout.

While officials have said any digital pound WOULD not replace cash or include programmable controls over user spending, the project has attracted scrutiny from lawmakers and privacy advocates.

More than 50,000 responses were submitted to a public consultation on the digital pound. Concerns have also come from commercial banks, which warned that state-backed currencies could trigger deposit flight during periods of financial stress.

Bailey reaffirmed that work on a wholesale central bank digital currency for use between financial institutions is progressing. However, he indicated that consumer-facing issuance remains under review.

The Monetary Policy Committee voted by a majority of 6-3 to keep interest rates at 4.25%

Find out more: https://t.co/rcGJUYFkWZ pic.twitter.com/VkO9vZyjgS

CBDC Debates in Global Finance

In the same speech, Bailey questioned the broader structure of financial regulation, suggesting that over-regulating banks may have shifted risk toward non-bank financial institutions.

“Whether we have over-protected the banking system via excessive regulation, and in so doing pushed more risk into non-banks which would be more safely housed in banks,” he said.

“Put another way, have we increased overall financial stability risk by raising the bar too high in banks?,” Bailey saids. “It’s a fair enough question, but intrinsically hard to answer.”

Other central banks have already advanced their digital currency programs. The European Central Bank is developing a digital euro prototype, and China has extended trials of its e-CNY across multiple provinces.

Central banks are assessing how to address changes in payment behavior, the growing role of private tokenized assets, and operational questions about state-backed money.

Frequently Asked Questions (FAQs)

A wholesale CBDC is used for transactions between financial institutions, while a retail CBDC would be accessible to the public for everyday use. Bailey supports the former but remains cautious on the latter.

Bailey’s skepticism could delay any decision on consumer rollout, keeping the UK behind other jurisdictions already piloting or launching retail digital currencies.

Potential applications include faster peer-to-peer payments, online retail transactions, and integration with emerging smart contract systems. However, no final decision has been made on its operational scope.