At the beginning of February, the United Kingdom government announced that a digital pound would soon be available. The Bank of England will issue the digital pound, and the CBDC Taskforce has overseen its case. The decision to roll out a digital pound stems from the declining use of cash in the United Kingdom. In 2008, physical cash made up 60% of transactions, but this figure has fallen to 15% as of February 2023. While there is yet a date set for the digital pound to hit the market, we know the Bank of England has plans to consult various stakeholders in the UK to learn about their opinions on the proposal. These stakeholders will include experts, organisations, and the general public.
What Do We Know About The Digital Pound?
The proposed digital pound, officially known as a retail central bank digital currency (CBDC), will not replace cash but merely provide consumers with another option to make everyday payments. According to the Bank of England, a digital pound will not pay interest, and the bank will not impose a negative interest rate. Consumers can use the digital pound online and in-store, as well as use it to make payments to friends and family. The introduction of the digital pound will also help businesses meet evolving money and payments trends, which will bode well with modern consumers looking for more monetary freedom, flexibility, and innovation.
Sign Of The Times
Over the years, consumers’ spending habits have changed. This is partly because consumer priorities have evolved, with many focusing on sustainability and diversity. However, spending habits have also changed because of revolutionising financial technologies like contactless payments. Through the growing acceptance of cryptocurrencies like Ethereum and contactless payments such as Apple Wallet and virtual credit cards, business-to-consumer (B2C) transactions have become more seamless. For example, retail stores like Lush and Etsy all accept Bitcoin as a form of payment. Many entertainment sites, like online casinos, also take cryptocurrencies for deposits and withdrawals.
Similarly, virtual credit cards have made online shopping easier. Consumers can also use this form of payment in-store if these stores support contactless payments. In this case, the advantage of virtual credit cards is that because they are stored digitally on a consumer’s phone, they do not have to worry about carrying around their wallet. That decreases the chances of theft or misplacing their cards while they are out. Like traditional credit cards, consumers still get a credit card number, validity date, and validation code, but they do not get the physical plastic card. The best virtual credit cards include Apple Card, Skrill, and Monese. All three virtual credit cards offer unique benefits, such as international money transfer features, cashback functions, and robust security features.
The proposed digital pound in the United Kingdom is just another addition to the changing financial technology market in the country that we have previously seen through virtual credit cards and cryptocurrencies. It is a sign of the times and will likely have positive implications for businesses and consumers across the country.
