The Bank of England and the Treasury are beginning consultations today into the launch of a digital pound, dubbed “britcoin”, which could appear before 2030.
It would use similar technology to cryptocurrencies like ethereum and bitcoin, providing consumers and businesses with a new way to hold and pay with sterling, as the use of physical cash declines.
A four-month consultation will begin on Tuesday, with the Treasury and BoE set to determine its viability in the wake of the FTX crypto exchange collapse late last year.
“A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability,” said BoE governor Andrew Bailey, with the new currency set to be less volatile than its privately issued counterparts.
“However, there are a number of implications which our technical work will need to carefully consider,” he added.
Both groups suggested the rise of digital currencies poses a risk to the traditional monetary system, eyeing a state-backed central bank digital currency (CBDC) as a more “reliable” asset which could retain its value over time.
“Any UK CBDC would work alongside - not replace - cash and bank deposits. We will continue to provide cash for as long as the public still want it,” the bank said.
Other central banks are exploring the use of digital currencies too, including the US Federal Reserve and the European Central Bank.