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But there are no guarantees, officials have admitted, with the process potentially taking longer. Officials said on Tuesday that it would launch a consultation on the introduction of a so-called central bank digital currency (CBDC) next year.
However, it would take until at least 2025 for such a currency to be launched in the UK, the Treasury and Bank of England said.
A joint statement explained: “The earliest date for launch of a UK CBDC would be in the second half of the decade.”
This will only happen if several other hurdles are cleared, including the consultation and a “research and exploration phase”.
Chancellor Rishi Sunak has dubbed the concept “Britcoin” (Image: GETTY)
Rishi Sunak speaking at COP26 (Image: GETTY)
The statement said it was a “major national infrastructure project”, but would be designed to exist alongside cash and bank deposits, rather than replacing them.
The Bank’s deputy governor for financial stability, Jon Cunliffe, said: “The plan to publish a consultation next year on CBDC is a crucial step in our policy development, especially as we further our thinking on the pressing issues at hand.
“What it will do is provide a platform for interested parties and relevant groups to engage with the key questions on the merits of CBDC, and whether the public sector should advance to a development phase.”
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“Britcoin” is a reference to the cryptocurrency Bitcoin (Image: GETTY)
Economic secretary to the Treasury John Glen said: “This consultation will begin an open discussion on the role a UK central bank digital currency might play in the UK.
“I’d encourage everyone to contribute to the discussion so we can explore the opportunities this could bring, as well as understanding any risks it may pose.”
An analysis published in the Financial Times in May claimed the launch of a Central Bank Digital Currency (CBDC) could expand the UK’s economy by up to £90billion.
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Professor Daniel Hodson, chairman of the CityUnited Project (Image: Bruges Group)
Lord Hannan of Cleremont (Image: GETTY)
City think tank the CityUnited Project mapped out the way forward in its Aurora report, also published in May.
Speaking Express.co.uk at the time, The CityUnited Project’s Chairman Professor Daniel Hodson added: “We believe that there’s a great opportunity for the United Kingdom to gain ‘first mover advantage’ in the western world.
“The Aurora plan is based on proven technology thanks to the existing world-beating expertise and innovative drive of the City of London.”
He added: “If this can be brought together with the kind of ‘can-do approach that Kate Bingham brought to the vaccine rollout, then the UK would be very well-positioned to protect and enhance the UK’s financial services globally, and to deliver real benefits to every person in the United Kingdom.
City of London: One of the world’s leading financial centres (Image: GETTY)
“Our Aurora team is looking forward to discussing these proposals with the Bank of England and HM Treasury and other interested parties and stakeholders in the coming days and weeks.”
Lord Hannan of Kingsclere, a member of the CityUnited project’s advisory board, said: “State-backed digital currencies are coming: that is not in doubt.
“The question is whether another country will get there early enough to offer an alternative model to China’s – a model more rooted in the principles of privacy and private property.
“Britain, with its concentration of financial services expertise, its fintech hub and its common law system, is ideally placed to be that country.”
A digital currency would not replace hard cash, however (Image: GETTY)
Speaking in April, Mr Sunak, who has referred to the idea of a CBDC as “Britain” on Twitter, 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.”
He continued: ”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.
“And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s pre-eminent financial centre.”
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