Treasury and bank plan to explore potential for digital pound

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, without itself being a cryptocurrency.

The new taskforce is part of a series of measures that the Chancellor Rishi Sunak hopes will help the UK’s financial technology sector.

As part of these measures, the Financial Conduct Authority (FCA) will set up a so-called scale box, which would support companies trying to scale up innovative technology.

The authority already runs a regulatory sandbox which allows companies to test innovations in the market, on real consumers.