The Bank of England (BoE) has signalled that it may hit the brakes on what was once one of Europe’s most closely watched central bank digital currency (CBDC) projects. The “digital pound” (“Britcoin”) had been touted to modernise Britain’s payments landscape. Now, the central bank is pulling back, citing a changed economic and technological environment, as well as robust public and industry feedback. This pivot could reverberate across financial markets, banks, and competing innovation efforts around the globe.
Why Is the Bank of England Pressing Pause?
After years of exploration and public consultation, BoE officials—backed by growing political consensus—have concluded that the case for a retail CBDC is much weaker than initially thought. Several factors have driven this reassessment:
- Public Concerns and Political Pressure: The recent national consultation saw a groundswell of privacy and surveillance concerns from UK citizens. Questions about the potential for government monitoring of transactions, and unclear benefits for ordinary users, spurred a heated debate in Parliament and the media.
- Unclear Economic Necessity: The central bank’s data shows digital payments driven by private sector innovation are already dominant. With cash usage now in single digits, proponents for a digital pound have struggled to demonstrate unique value that isn’t already offered by incumbent banks or new waves of fintech participants.
- Risks to Financial Stability: Major UK banks have warned that CBDCs could siphon away retail deposits into digital wallets backed by the BoE, compressing their ability to lend and, in stress scenarios, amplifying the risk of financial instability.
- Technological race with the Private Sector: Instead of government-led disruption, the BoE has shifted its rhetoric to supporting regulated innovation. The vibrant UK fintech sector, along with industry efforts to develop tokenized deposits and regulated stablecoins, now appear to offer a stronger path forward.
Impact on Banks, Markets & Other Players
For high street banks and payment firms, the BoE’s cooling on CBDC will simplify matters. Here’s what it might mean:
- Banks maintain their central role as deposit takers and lenders. They have more time to adapt and invest in account and payment innovations without the existential threat of a state-run retail money infrastructure.
- Payment fintechs retain a central place in Britain’s digital payments landscape. The decision gives additional incentive to create robust, user-friendly, and secure payment solutions, but now with closer scrutiny from regulators.
- Market stability is preserved. For now, the risk of a rapid migration of funds out of commercial banks and the resulting risks of lending contractions is off the table.
Connecting to Global Trends
Britain is not alone in tempering its CBDC ambitions. Across the developed world, momentum has slowed:
- United States: The U.S. Congress, during its so-called “Crypto Week” in mid-July 2025, passed the Anti-CBDC Surveillance State Act—legislation that prohibits the Federal Reserve from issuing, developing, or researching a central bank digital currency (CBDC) for retail use without explicit authorisation from Congress. President Trump had already signalled this direction earlier in the year with an executive order to halt all CBDC work, and he signed the GENIUS Act into law the same week, creating a new regulatory framework for privately issued stablecoins but not a digital dollar
- European Union: The ECB continues to study its own digital euro but with a growing focus on privacy and a clear reluctance to proceed before public consensus is reached.
- Asia and Beyond: China remains the exception with a growing pilot for its e-CNY, but other markets (like South Korea and Singapore) are pivoting towards wholesale CBDC solutions or enhanced bank-driven digital money platforms.
Only a handful of developing economies such as the Bahamas and Nigeria have fully launched retail CBDCs, and even their adoption is mixed, with consumers often defaulting to private sector alternatives.
What Comes Next?
The Bank of England will continue close monitoring of the payments landscape, seeking to ensure resilience, innovation, and consumer choice. Meanwhile, regulators are expected to turn their focus to stablecoins and other forms of digital money, aiming to balance innovation incentives with consumer protection and market stability.
The synchrony especially between the US and UK sets a powerful precedent. It signals to other central banks that retail CBDCs are no longer inevitable and that market-driven stablecoins, under strong regulatory guardrails, may be the preferred path forward. This is already influencing debates in Europe and Asia, where authorities are reconsidering the balance between public and private digital money
