The Bank of England is exploring the potential risks and benefits of a central bank digital currency.
This would be an electronic form of central bank money that could be used by households and businesses to make payments, alongside cash and money held in bank accounts.
The Bank has not yet made a decision on whether to introduce one, and it intends to engage widely with people and organisations on the benefits, risks and practicalities of doing so.
If such a currency were to be introduced in the UK, it could be denominated in pounds sterling, just like banknotes, so £10 of the digital currency would always be worth the same as a £10 note.
Any such currency would be introduced alongside rather than replacing cash and bank deposits – and any decision to introduce it would involve the Government, with input from relevant regulatory authorities, Parliament and society more generally, the Bank said.
The Bank is inviting feedback to its discussion paper by June 12. It wants to hear from the public, technology providers, the payments industry, financial institutions, academics, other central banks and public authorities.
Welcoming the paper, David Clarke, head of policy at Positive Money, said: “With the decline of physical cash, we risk surrendering even more power over our money and payments system to unaccountable private interests.
“It is timely that the Government and Bank of England are working together to explore the benefits of a central bank digital currency, which would allow us to keep a form of public money and enable democratic control to be exercised over the monetary system.”