Will The British Pound Go Digital?

Digitization. It’s something that the private sector has been excelling at for years. The public sector has slowly caught up over the last decade and now the UK government is planning the next great evolution of its economy — a digital pound. But can a digital pound be programmable? And is that a good thing? Read on to explore this hot topic before finding out this week’s fundamental market events you won’t want to miss.

What is a Digital Programmable Currency?

Digital programmable currencies, or central bank digital currencies (CBDC), are a digital form of fiat currency that is issued and regulated by a central bank. Think crypto, minus the decentralisation.

Oh, but it’s “not crypto” — the UK government really wants to make sure you know that.

Why? Because it’s exploring the potential for a digital programmable currency, which could be used by households and businesses for their everyday payment needs. It calls it the “Digital Pound”. Original.

The government is so into the idea that they even made a website featuring a slick explainer video (public sector marketing is also catching up). Check it out if you want to know more.

The benefits of a digital pound

The government has been quite clear that its CBDC would not replace cash, stating:

“…it would not replace cash. We know being able to use cash is important for many people. That’s why we will continue to issue it for as long as people want to keep using it.”

So, what are the benefits of a Digi Pound? Here are a few:

● A digital programmable currency could make it easier and faster to make payments. It could reduce costs for businesses as well as consumers and could make it easier for businesses to trade with each other. All very good things.

● Reduced costs for businesses could then lead to lower prices for goods and services, which has obvious consumer benefits and could make it easier for businesses to compete with one another. Nice.

● If implemented correctly, a digital pound would provide a stable and secure form of payment. This could help to protect the economy from financial shocks. Very important.

● A digital programmable currency would likely compete with existing payment methods which could lead to lower prices for payments and could give consumers more choices. Love it.

So, faster, cheaper and stronger — all good, then.

Risks of the quid going digital

CBDC’s do have some drawbacks and if you spend time on forums like Reddit, you’ll know that they’ve got people pretty heated. Risks include:,

● Risking financial instability if not properly designed and implemented. This could happen if the currency is not properly regulated or is not backed by sufficient reserves. Ouch.

● Privacy and security breaches if not properly designed and implemented. This could happen if the currency is not stored securely, or if it is not properly encrypted. Oops!

● Money laundering and other criminal activity if not properly regulated. This could happen if the currency is not traceable, or if it’s not being monitored appropriately. Not good!

Dystopian level control over spending, freedom of movement and overall financial freedom. Dive down that rabbit hole if you’re looking for a good scare.

So, is this actually going to happen?

Well, HMG is doing all of the right things. It’s investigating all of the angles and getting opinions from all the right people, i.e. businesses, consumers, and broader civic society. There’s a clear understanding that for any CBDC to work, it needs to bring absolute benefit, and marginal risk.

It’s still early days and the government has not yet put a timeline on things. It will take as long as it takes, and may not happen at all.

…but at least you know what it is now. 🙂

Let us know what you think!

How do you feel about the Sterling going digital? What kind of impact could it have on life in the UK? Let us know by tweeting us at @_contentworks.

Top fundamental events week commencing 10.04.23

Ready for the week ahead? Here’s everything you need to know about.

Monday, April 10

● JPY — Bank of Japan monetary policy decision

● GBP — UK public sector net borrowing data (February)

● USD — US producer price index (PPI) (February)

Tuesday, April 11

● EUR — European Central Bank monetary policy decision

● GBP — UK house price index (February)

● USD — US consumer price index (CPI) (February)

Wednesday, April 12

● CAD — Bank of Canada monetary policy decision

● GBP — UK retail sales data (February)

● USD — US industrial production data (February)

Thursday, April 13

● AUD — Reserve Bank of Australia monetary policy decision

● GBP — UK unemployment data (3 months to February)

● USD — US initial jobless claims data (week ending April 8)

Friday, April 14

● CNY — China Caixin manufacturing PMI (April)

● GBP — UK gross domestic product (GDP) data (fourth quarter of 2022)

● USD — US personal consumption expenditures (PCE) data (February)

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Speak soon!

The Contentworks team