A digital pound is being considered by the Government, according to a consultation paper published by HM Treasury and the Bank of England.
The idea would be to develop central bank digital currency (CBDC).
The digital pound would be issued by the Bank of England and would have the same value as £1 in your pocket.
Analysts say that it is no different to paying for goods online or moving money via the web.
Officials see it as being interchangeable with cash and bank deposits – but insist no decision has been taken at this stage.
According to a government statement: “The Bank of England will take forward further research and development work and the public are being invited to give their views on the scheme to be taken forward.”
But the announcement will be greeted nervously by those who have observed the collapse of cryptocurrency exhanges like FTX.
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.”
Governor of the Bank of England, Andrew Bailey, said: “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.
“However, there are a number of implications which our technical work will need to carefully consider. This 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.”
The consultation is being launched because both HM Treasury and the Bank want to ensure the public have access to safe money that is convenient to use as our everyday lives become more digital, while supporting private sector innovation, choice and efficiency in digital payments.