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As we have now entered 2026, the idea of a retail CBDC (‘Digital Pound’) in the UK remains under consideration.
The Bank of England and HM Treasury are still working through their multi-year design phase, and there are several major policy, legal and technical questions that remain unresolved. These issues will shape not only whether the UK proceeds with a retail CBDC, but also what the role of the private sector, including banks and payments firms, would be.
The legal framework: what needs to be included?
One of the biggest outstanding components is the legislative framework. Unlike the European Union, which has already drafted a Digital Euro Regulation, the UK hasn’t yet laid out a specific legal framework for a Digital Pound. The UK Parliament will need to define the powers, limits and governance arrangements surrounding a digital pound.
For the UK, this will likely need to cover several key areas:
Consumer protections: How privacy, data protection, and user rights will be safeguarded.
Operational liability: Clarifying who is responsible if something goes wrong - whether it’s the central bank or the private wallet providers.
Oversight and governance structures – particularly around resilience, outages and systematic risk.
HM Treasury is expected to lead on this work, including a formal “national conversation” on the Digital Pound. This process will take some time, as it requires public consultation, cross-industry engagement and political scrutiny.
The commercial model and cost benefit analysis
Another big unknown is the commercial model. In the Eurozone, PwC produced an analysis on the digital euro - released in the summer of 2025 - that eurozone banks could be looking at €18–30 billion in costs over the first years of implementation. These costs relate to wallet services, integration, customer support, authentication, fraud prevention and the broader technical ecosystem. The ECB has since produced a counter-estimate of around €6bn.
A similar estimate does not yet exist for the UK. But the same underlying questions apply:
What does the technical infrastructure look like?
Who would fund the wallet infrastructure?
How are PIPs compensated?
How will the Bank of England fund or operate directly?
Without a clear commercial model, there is a risk that the digital pound becomes an unfunded obligation for banks and payments providers. Without a clear commercial model, it’s hard to see how this all comes together sustainably (PwC report summary).
Financial stability and holding limits
The Bank of England’s latest analysis shows that holding limits will be essential in the early years of any rollout. The Bank of England continues to work on the basis of an introductory individual limit of £10,000-£20,000 for consumers holding Digital Pounds. This recommendation has so far remained unchanged since their 2023 consultation.
This stands in contrast to the EU’s approach, where the digital euro is expected to have a holding limit of around €3,000 per person.
The Bank of England has also explored business holding limits, including potential caps in the millions for corporate users, with possible exemptions for larger firms. While these are still under consideration, they will form a critical part of the transition framework.
UK Finance has been clear that holding limits must be carefully calibrated to avoid destabilising bank balance sheets, particularly during stress conditions.
Learning from global experiences
Globally, there is as yet no clear retail CBDC success story. The Bahamas, Nigeria and Jamaica all launched CBDCs, but adoption has remained very low. These early examples highlight that success depends not on technology alone, but on real consumer demand and trust.
This global track record supports the UK’s cautious approach. The question is no longer “can a CBDC be built?” but whether people and businesses will actually make use of it.
In summary, major decisions on legislation, commercial models, holding limits and system design still lie ahead. HM Treasury and the BoE expect to assess the case for the digital pound this year, but even a positive decision would mark the beginning, not the end, of the journey.
05.01.26
Marius Bischoff, Manager, Payments, Innovation and Resilience, UK Finance
23.01.26
21.01.26
22.01.26
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