Bank of England explores privacy tech for digital pound

The Bank of England is exploring how emerging privacy technologies, such as zero-knowledge proofs (ZK-proofs), could enhance data privacy in a potential digital pound. In its report ‘Enhancing the Privacy of a Digital Pound,’ the bank suggests these technologies may limit data sharing, giving users greater control over their information while maintaining privacy between the central bank and payment intermediaries.

Following its 2023 public consultation, the Bank of England, alongside HM Treasury, assured the public that personal data would remain inaccessible to both the government and the central bank. Collaborating with MIT’s Digital Currency Initiative, the bank continues to research privacy-enhancing technologies while acknowledging the challenges of balancing privacy with regulatory requirements.

The digital pound initiative began in 2020 and has since undergone detailed evaluations. While no decision has been made on launching the currency, the central bank emphasises the need to adapt to declining cash use and advancements in payment technologies.