LONDON — Britcoin is transferring nearer to actuality.

U.Ok. authorities on Monday mentioned British companies and customers are more likely to want a digital model of the pound, formally asking for public touch upon the concept of introducing a central financial institution digital foreign money.

Britain, house to the world’s second-biggest monetary heart, is trailing former colonies corresponding to Nigeria, the Bahamas and Jamaica in rolling out a digital foreign money. Greater than 80% of the world’s central banks are contemplating launching digital currencies or have already carried out so, in keeping with the marketing consultant PwC.

“Whereas money is right here to remain, a digital pound issued and backed by the Financial institution of England could possibly be a brand new method to pay that’s trusted, accessible and simple to make use of,” Treasury chief Jeremy Hunt mentioned in an announcement. “That’s why we wish to examine what is feasible first, while all the time ensuring we shield monetary stability.”

The decision for public enter comes virtually two years after the Treasury and Financial institution of England mentioned they have been contemplating introducing a digital foreign money.

Whereas Prime Minister Rishi Sunak steered naming the initiative “Britcoin” when he was Treasury chief, the Financial institution of England has confused that the potential foreign money shouldn’t be confused with cryptocurrencies like Bitcoin.

Backed by the central financial institution, the brand new foreign money can be “dependable and retain its worth over time,” in distinction to cryptocurrencies that may fluctuate wildly and threaten the holdings of buyers, the Financial institution of England says on its web site.

That trade has been notably unstable in latest months, escalating requires larger regulation. Crypto crashes final yr tanked property, whereas crypto alternate FTX’s multibillion-dollar collapse and chapter in November triggered fraud expenses in opposition to founder Sam Bankman-Fried.

The proposed digital foreign money can be denominated in kilos, with 10 kilos of digital foreign money all the time equal to a 10-pound word, the financial institution mentioned. Held in a digital pockets, the foreign money could possibly be used to pay for items and companies electronically.

Supporters of central financial institution digital currencies say they make digital transactions simpler and cheaper and develop entry to the monetary system as a result of they can be utilized by individuals who don’t have financial institution accounts.

This is among the causes the Bahamas turned the primary nation to introduce a digital foreign money in 2020. Nigeria and Jamaica have since adopted go well with, with China and greater than 20 different nations working trial tasks. The U.S. and European Union are contemplating introducing digital currencies.

However digital currencies additionally current dangers, together with cyberattacks, privateness issues and the hazard that they can be utilized by criminals.

As a result of cash invested in central financial institution digital currencies is safer than a financial institution deposit, in addition they could draw financial savings away from industrial banks and weaken the monetary system, critics argue.

A digital pound would have “dangers however no apparent advantages,” former Financial institution of England Gov. Mervyn King, now a member of the Home of Lords, mentioned not too long ago.

Whereas such digital currencies could also be helpful in nations that don’t have efficient banking techniques, that’s not the case within the Britain, he mentioned.

“The federal government has mentioned that it needs the U.Ok. to be on the forefront of innovation, crypto-assets and fintech, however we have to be selective and never pushed by a misplaced enthusiasm for all issues crypto,” King mentioned.