Bank of England Reconsiders Digital Pound as Stablecoins Gain Traction

The Bank of England is reevaluating its plans for a central bank digital currency (CBDC) as stablecoins dominate the global financial conversation. Officials have yet to make a final decision, but the project remains in its design phase. The shift in priorities reflects a broader trend toward private-sector innovations in digital payments.

Governor Andrew Bailey has publicly expressed skepticism about the necessity of a retail CBDC, urging banks to focus instead on tokenized deposits. "I remain unconvinced that we need to create new forms of money," Bailey said in June. While supportive of a wholesale CBDC for institutional use, he has been less enthusiastic about a consumer-facing digital pound.

Tokenized deposits are emerging as a potential bridge between traditional finance and decentralized systems. This approach could deliver similar benefits to a CBDC without the central bank taking on the role of issuing new currency. The Bank of England's hesitation underscores the challenges of balancing innovation with financial stability.