The Bank of England and the Treasury believe the introduction of a digital pound in the UK is necessary. As cash payments currently account for only 15% of transactions, while in 2011 they accounted for more than 50%.
Andrew Bailey, governor of the Bank of England, and Jeremy Hunt, chancellor of the Exchequer, are expected to support the introduction of a government-owned digital currency as cash usage is predicted to decline as the economy moves towards a cashless digital economy.
The two agencies therefore intend to hold a four-month consultation with cryptocurrency firms, authorities and the public to form an opinion before setting up the CBDC.
Despite this, Andrew Bailey and Jeremy Hunt stress that it is too early to decide on the infrastructure for CBDC, but additional work is "necessary". They add that the CBDC will take years to build and 2025 is the earliest the Bank of England can start developing and testing a prototype.
The Bank of England has consistently informed the public that their digital token, called the digital pound, is not replacing currency, but will be used together with it. This digital money is created and circulated by the country's central bank.
The decision to launch a digital pound will not be made until 2025. If all goes well, it could be launched by 2030, but this would require significant public funding.