We intend that the digital pound would have the same (or stronger) privacy protections as bank accounts, debit cards or cheques which are now used for 85% of transactions in the economy. Individuals’ personal details and transaction records would be known only to their private sector wallet provider in the same way they are for bank account providers today (and subject to the same privacy protections). But individuals’ details and records would not be known by the Government or the Bank of England. In this way, the digital pound would provide privacy while also protecting against fraud and financial crime. The digital pound would not be an anonymous bearer instrument like cash, but physical cash would remain available to those who wanted to use it. Neither the Government nor the Bank would program a digital pound or restrict how it was spent. Instead, the Bank would provide the infrastructure and minimum functionality for the private sector to provide programmability features for users. Those features would require user consent. As with banknotes and many current accounts, no interest would be paid on a digital pound. Its purpose would be as a means of transaction - to make and receive payments - rather than as a savings product. Nor do we see the digital pound as a monetary policy instrument and as such it would, like cash, have neither positive nor negative remuneration.
I would like to thank Andrew Bailey, Sarah Breeden, Ben Broadbent, Victoria Cleland, Andrew Hauser and Tom Mutton for their comments. 1. To function money relies on a shared understanding that the relevant instrument can be used to calibrate, exchange, store and settle claims. For further discussion on this point see recent speeches ‘It’s Time to Talk about Money’ (2020) and ‘Do We Need Public Money (2021)’. 2. The Bank of England also issues reserves to financial institutions. This is a form of wholesale money that allows regulated firms to hold claims on the Bank of England. 3. Only the Bank of England issues banknotes in England and Wales, but six banks in Scotland and Northern Ireland also issue banknotes, backed largely by assets at the Bank of England. See Scottish and Northern Ireland banknotes | Bank of England and the Scottish and Northern Irish Banknotes Regulations (2009) for further details. 4. The Payments of Wages Act 1960, as amended by the Truck Act. 5. Some examples of programmable functionality might include: instantaneous currency exchanges with reduced settlement risk; more efficient real estate purchases whereby all parties’ transactions are executed simultaneously by a smart contract; or an automated payment made by a vehicle at a toll booth. 6. Financial Services and Markets Bill (2023) . In December 2022, the Bank of England published a consultation closing on 10 February, setting how it intends to use these new powers. ,  7. See for example Haldane, A.: ‘Seizing the Opportunities from Digital Finance’ (2020). 8.