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The digital pound: A plan designed to fail?

journal contribution
posted on 2024-05-09, 15:10 authored by Alistair MilneAlistair Milne

The UK authorities have consulted on the issue of the ‘digital pound’, a retail central bank digital currency (CBDC) for general use in payments by UK households and firms. The stated ambition is a new form of central bank money, used alongside Bank of England notes and commercial bank deposits. There are inherent contradictions in these plans. Promoting adoption requires that users should be able to freely and conveniently receive and send digital pound payments and that account services can compete effectively with commercial bank transaction accounts. Containing the risks of retail CBDC to financial stability requires doing the opposite: limiting the use of the digital pound and handicapping account providers in their competition with commercial banks. To resolve this contradiction, ambition should be scaled back, focusing on specific and narrow use cases which cannot be easily addressed using commercial bank transaction accounts.

History

School

  • Loughborough Business School

Published in

The Journal of Fintech

Publisher

World Scientific

Version

  • AM (Accepted Manuscript)

Publisher statement

Electronic version of an article published as [Journal, Volume, Issue, Year, Pages] [Article DOI] © [copyright World Scientific Publishing Company] [Journal URL]

Acceptance date

2024-04-29

ISSN

2705-1099

eISSN

2737-5366

Language

  • en

Depositor

Prof Alistair Milne. Deposit date: 1 May 2024

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