Government to explore whether UK should have digital currency

The government will set up a new taskforce to explore whether the UK should have its own digital currency, one of a series of possible reforms designed to benefit the financial technology sector.

The Bank of England and the Treasury will jointly explore the objectives of establishing a central bank digital currency, and explore the risks as well as the benefits.

It is a step along the path of creating an e-pound, a sort of digital bank note.

However, authorities said they are still committed to supplying cash to those who need it.

Digital currencies are already being explored or even implemented in several other countries. They could bring benefits in the way cross-border payments are made, and also take advantage of a general decline in cash payments. Currently, only the Bahamas has such a currency, although China is trialling it in several cities.

Earlier this week, the boss of Sweden’s central bank said the country could have such a digital version of its currency by 2026, while the boss of the European Central Bank has indicated an electronic euro might be created within four years.

The idea of a central bank digital currency draws inspiration from Bitcoin and other cryptocurrencies.

One of the benefits of an e-pound would be as a back-up to card payments.

At present, customers can turn to cash as an alternative if they are in a shop where the card machines have stopped working but as cash use becomes more uncommon its place as a contingency to electronic payment systems will decline.

Chancellor Rishi Sunak said: “Our vision is for a more open, greener, and more technologically advanced financial services sector.

“The UK is already known for being at the forefront of innovation, but we need to go further.

“The steps I’ve outlined today, to boost growing fintechs, push the boundaries of digital finance and make our financial markets more efficient, will propel us forward.”

“The UK is at the forefront of innovation but we need to go further