The Bank of England (BoE) and the HM Treasury are considering plans to launch a "digital pound."
The introduction of the currency could be expected within the next ten years. In its announcement of the consultation yesterday, the Bank of England and the Treasury confirmed that no decision has been taken at this stage however, both departments will continue to research and develop the concept.
If plans are ultimately approved, the central bank digital currency (CBDC) would be issued by the Bank and households and businesses could use it for everyday payments in stores and online. The currency would also be interchangeable with cash and bank deposits alongside normal money, which the Treasury says will "complement cash", reported The Mirror.
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But unlike cryptocurrencies, the "digital pound" would not be "volatile" because it would come from a legislated organisation rather than a private sector. Both the Treasury and the central bank have said a digital pound may help when prioritising the public's access to safe money. They also agree it could support "private sector innovation, choice and efficiency in digital payments".
Chancellor of the Exchequer, Jeremy Hunt said: "While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible and easy to use. That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”
A decision about whether to implement a digital pound will be taken around the middle of the decade and will be based on "future developments in money and payments" the Bank of England said. The earliest stage at which the digital pound could be launched would be the second half of the 2020s.
A digital pound will always have the same value as cash however it would just be replicated in digital format and accessed through digital wallets on smartphones or smartcards. The Bank of England claims the payment method would be "widely available" and would be "risk-free, convenient and trusted" as it would be subject to "rigorous standards of privacy and data protection". It said: "Neither the Government nor the Bank would have access to personal data and holders would have the same level of privacy as a bank account."
There may be initial restrictions on how much you can spend or hold at once, but that is still to be discussed. Central bank digital currencies are reportedly under development in more than 100 countries globally in China, the US and in countries in the Eurozone.
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