Cash in people’s pockets would be superseded by a new ‘Britcoin’ digital currency in a plan being pushed by Chancellor Rishi Sunak.
In what Treasury insiders say would be the biggest upheaval in the monetary system for centuries, the Bank of England would establish a direct digital equivalent to physical money and take control of it in the same way as sterling.
Its supporters in the Treasury say that it would allow the Bank to give the economy a boost in times of financial crisis by paying the ‘Britcoins’ directly into people’s bank accounts.
It could also slash the cost and time it takes to make payments online and transfer money around the banking system.
Britcoin could also cut banking costs dramatically for small firms. However, critics warn that a digital version of the pound could lead to greater financial instability – making it harder for the Bank to regulate the economy with monetary policies such as setting interest rates.
There are also fears the introduction of Britcoin would lead to higher loan and mortgage rates as millions of people switched cash to central bank digital currency, eating into the amount of money high street banks have on deposit to lend to borrowers.
A taskforce of Treasury and Bank officials set up to examine the merits of Britcoin – known as the Central Bank Digital Currency – is expected to report to Mr Sunak by the end of the year.
The Treasury is understood to be more keen than the Bank of England on the idea of creating an official British digital currency to compete with the rise of Bitcoin because they are wary of the huge numbers of people piling into cryptocurrencies. Some investors have lost vast sums as the price of Bitcoin has gyrated wildly.
Read more: The agenda I have exposed for decades plays out: The Britcoin revolution! Rishi Sunak plans to replace our cash with official digital currency in ‘biggest upheaval in the monetary system for centuries’