The Treasury and the Bank of England (BoE) are consulting on introducing a potential digital pound in the UK.

If introduced, the digital pound, or central bank digital currency (CBDC), would be interchangeable with cash and bank deposits, complementing cash.

According to a consultation paper published this week by the Treasury and the Bank of England, a digital pound is “likely to be needed in the future”, and could be used by households and businesses for everyday payments in-store and online.

The BoE will now take forward further research and development work, with the public currently being invited to give their views on the scheme to be taken forward.

The consultation is being launched because both the Treasury and the BoE want to ensure the public have access to safe money that is convenient to use as everyday lives become more digital.

Chancellor, 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 BoE, Andrew Bailey, added: “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 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.”

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