Mark Carney

Mark Carney, the bank’s outgoing governor, said that the bank was in the “middle of a revolution in payments”. He urged that the bank must look into how electronic money could work.

He said this new system would work alongside and not replace, paper banknotes while people still wanted physical cash.

The bank is considering a Central Bank Digital Currency, which would be denominated in pounds sterling, just like banknotes. Therefore ensuring that £10 of the digital currency would always be worth the same as a £10 note.

This system would be different from money held digitally in a bank account, or cryptocurrencies. It would be guaranteed by the Bank, rather than a commercial business.

The principle also suggests that consumers would be able to pay for things without all the data about their transactions going to their bank. This would provide some level of anonymity, as there is with cash payments, the BBC reports. 

Loading Central Bank Digital Currency would be an electronic version of withdrawing banknotes from an ATM. The Bank has urged that this would not replace cash, particularly for those who prefer to use it.

A discussion paper issued by The Bank of England said: “As long as demand for cash remains, the Bank is committed to meeting this demand.”

The currency would also be separate from card payments, meaning it would not be affected by technical failures at Visa, Mastercard, or other payment networks.

The introduction of a digital currency could result in “programmable money” when payments could be integrated with appliances at home or tills at the shops.

The bank said that tax payments could be routed to HM Revenue and Customs at the point of sale.