A recent consultation by the UK Treasury has revealed that plans for a digital UK currency are being considered and could be realised within a decade.
According to Investment Week, the digital pound would be issued by the Bank of England and would be interchangeable with cash for everyday payments in-store and online by businesses and individuals.
The UK government said that a decision about whether to go ahead with a digital pound will be taken around the middle of the decade. The earliest stage at which the digital pound could be launched would be the second half of the decade.
The Bank of England will research the idea, and the public are being invited to give their views on the scheme.
The Treasury claimed that its digital currency plans are to ensure the public have access to safe money that is convenient to use in a digital world. It added that the consultation is to support private sector innovation, choice and efficiency in digital payments.
Under the government’s plans, digital money would replicate the role of cash in a digital world – meaning that a digital pound would have the same worth as physical cash.
The digital pound would be issued by the Bank of England, but neither the government nor the Bank would have access to personal data.
The Bank would provide the central public infrastructure in the form of a ‘core ledger’ – a secure technology platform – which would provide the minimum necessary functionality. Such cash would be accessed through digital wallets offered to consumers by the private sector through smartphones or smartcards.
Consumers could then use it for payments, online, in-store and for family and friends, rather than savings.
Chancellor 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 is trusted, accessible and easy to use.
“That is why we want to investigate what is possible first, whilst always making sure we protect financial stability.”
Governor of the Bank of England Andrew Bailey added, “As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow.
“A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.
“The consultation and the further work the Bank will now do will be the foundation for what would be a profound decision for the country on the way we use money.”
Last year, the Bank of England partnered with HM Treasury and the Financial Conduct Authority to undertake a two-day simulation exercise.
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