This decision reflects growing skepticism about government-issued digital money as countries worldwide reassess their digital currency strategies.
Officials Question the Need for New Money
Bank of England Governor Andrew Bailey has expressed strong doubts about creating a digital pound for everyday use. In recent statements, Bailey questioned why the UK needs to “create new forms of money” when existing payment systems could be improved with digital technology instead.
The central bank has been quietly encouraging private companies to develop payment innovations that could deliver similar benefits without launching a government-controlled digital currency. This approach represents a major change from the Bank’s position just two years ago, when officials said a digital pound was “likely” necessary.
“My view is, if that’s a success, I question why we need to introduce a new form of money,” Bailey told lawmakers during a recent Treasury committee hearing.
Global Retreat from Digital Currency Projects
The UK’s hesitation comes as multiple countries abandon or pause their CBDC initiatives. Canada and Australia have both scrapped plans for retail digital currencies within the past year. Nigeria ended its digital naira project after only 0.5% of citizens used it during a 14-month trial period.
The shift gained momentum when President Trump issued an executive order in January 2025 halting all US work on retail CBDCs, making America the only major economy to formally ban such projects. South Korea has also paused its digital currency efforts, choosing to focus on private stablecoins instead.
These decisions signal a broader move away from government-controlled digital money toward private sector solutions.
Privacy Concerns Drive Public Opposition
Public sentiment has played a key role in dampening enthusiasm for CBDCs. Surveys in the United States show twice as many Americans oppose a digital dollar compared to those who support it. Opposition jumps to 74% when people learn the government could control how they spend their money.
Similar privacy concerns have emerged across Europe and other democratic nations. Citizens worry about government surveillance of their spending habits and potential restrictions on their financial freedom. These fears have made politicians more cautious about pursuing digital currency projects.
The Bank of England’s own research shows declining public interest in a government-issued digital pound, with key advisory figures quietly stepping away from committees focused on the project.
Private Digital Money Gains Ground
While government digital currencies struggle, private stablecoins are thriving. These digital tokens, pegged to traditional currencies like the US dollar, processed $27.6 trillion in transactions during 2024 – more than Visa and Mastercard combined.
Stablecoins offer many of the same benefits as CBDCs, including fast payments and lower costs, without government control. Major financial institutions like JPMorgan and Visa are now integrating stablecoins into their payment networks.
The rapid growth of these private alternatives has reduced the urgency for central banks to create their own digital currencies. If companies can provide efficient digital payments, many officials question whether new government money is needed.
Digital Pound Project Remains on Life Support
Despite the skepticism, the Bank of England hasn’t officially killed the digital pound project. The bank plans to launch a “Digital Pound Lab” later this year to test potential applications and gather feedback from businesses.
Officials want to keep the option available in case circumstances change or private sector innovations fail to meet public needs. However, the bank’s current stance suggests growing willingness to abandon the retail digital pound if private companies continue advancing payment technology.
Any decision to proceed would require approval from Parliament and new legislation protecting user privacy. The earliest timeline for launch remains the second half of this decade, assuming the project moves forward at all.
Looking Ahead: Private Innovation vs. Government Control
The retreat from CBDCs reflects a fundamental debate about the future of money. Governments initially saw digital currencies as tools to maintain control over monetary policy and payments in an increasingly digital world. However, public resistance and the success of private alternatives have forced a rethink.
For now, stablecoins and other private digital payment solutions appear to be winning the race. Their voluntary adoption, combined with less government oversight, makes them more appealing to both users and businesses.
The Bank of England’s hesitation signals that the age of government-controlled digital money may be ending before it truly began. Instead, the future of digital payments may belong to private companies working within existing regulatory frameworks rather than new forms of state-issued currency.
This shift could reshape how people think about money itself, moving from government-backed currencies toward market-driven digital assets that offer similar functionality without centralized control.
