Will there be a digital pound in use by the end of the decade?
The workings of a digital pound are being weighed up by the Bank of England and Treasury. We explain what that would look like for you
- (opens in new tab)
- (opens in new tab)
- (opens in new tab)
- Look After My Bills Newsletter Newsletter

A new digital pound is likely to be in use later this decade, according to the Treasury and the Bank of England.
Both institutions will start a four-month consultation on the idea for the digital currency on Tuesday.
Chancellor Jeremy Hunt said: "We want to investigate what is possible first, whilst always making sure we protect financial stability."
The idea behind the central-bank digital currency (CBDC) is to create a new, "trusted and accessible" way to pay in the digital age.
A digital pound, dubbed 'Britcoin', would be issued by the Bank of England and would be a digital asset that you couldn’t hold or touch as you do with pound coins or notes.
But a digital pound would be equal to £1 in cash, according to the Treasury, and could be used to make payments in person or online.
It would be interchangeable with cash and bank deposits, and – as with the current system of notes – be issued in denominations of pounds sterling. No interest would be paid on digital pounds held in a digital wallet.
The idea for a digital pound is not new: Prime Minister Rishi Sunak asked the central bank to look into a state-backed digital currency in 2021 when he was chancellor.
The news comes amid the popularity of digital banking in recent years and a surge in bank branch closures.
The Bank and the Treasury will look to bolster public confidence in a digital pound after the volatility of cryptocurrencies, with its track record of “boom and bust“ cycles, and the recent collapse of the crypto exchange FTX.
Assuming the consultation is successful, a digital pound will not be built until at least 2025 and the earliest date that cash could be held in digital wallets via smartphones or smartcards would be the end of the 2020s, the Bank and the Treasury say.
How will a digital pound be different to other cryptocurrencies?
There are several differences between a digital pound and cryptocurrencies.
Cryptocurrencies are decentralised, meaning it’s not backed by a government, central bank or financial institutions. Instead it operates on a peer-to-peer network, with transactions being recorded on a public ledger using a technology called blockchain.
The digital pound will be issued by the Bank of England. This means it will have intrinsic value. £10 of the digital pound will be the same as a £10 note in your wallet. This would make it a so-called stablecoin - making it not as volatile as cryptocurrencies.
The digital pound also wouldn’t be anonymous; the Treasury notes that “the ability to identify and verify users is necessary to prevent financial crime, and essential for trust and confidence in money and therefore wide use of the digital pound”. This would be similar to digital payments from bank accounts.
There would likely be initial limits on how much of the digital currency a person or company could hold.
There are a few similarities with cryptocurrencies. A digital pound would use similar technology: a “core ledger”, in other words, a fast, resilient, secure technology platform. But, it will be provided by the central Bank, instead of a private firm.
Users would store their Britcoin in a digital wallet, and manage their balance and make payments from the wallet. These would work in the same way as contactless payments. Payments would be speedy and confirmed immediately.
What could I use the Britcoin for?
Britcoin would be used for everyday spending in the following ways:
- in-store, online and person-to-person payments
- micropayments - or for payments of very small amounts
Eventually, Britcoin could be used:
- to buy and sell goods and services, effectively bypassing commercial banks
- cross-border payments, without the high currency exchange fees charged by banks
- to save and earn interest
Katie is staff writer at The Money Edit. She was the former staff writer at The Times and The Sunday Times. Her experience includes writing about personal finance, culture, travel and interviews celebrities. Her investigative work on financial abuse resulted in a number of mortgage prisoners being set free - and a nomination for the Best Personal Finance Story of the Year in the Headlinemoney awards 2021.
-
-
Seven ‘awful April’ price hikes – how to beat them and save money
A whole heap of price hikes are coming in this April – we run through the main ones along with ways to beat them and save money
By Sue Hayward • Published
-
State pension underpayment warning - have you been underpaid and eligible for more than £11,500?
Thousands of retirees, mainly women, are still owed money by the government after being underpaid their state pension. We explain what you need to know
By Katie Binns • Last updated
-
State pension age rise to 68 could be delayed - what it means for your retirement
The state pension age may stay at current levels for longer than expected after the government reportedly shelved plans to increase it to 68 by the late 2030s. We explain what it all means for you
By Stephanie Baxter • Published
-
Get more for your money with a stocks and shares ISA
A stocks and shares ISA could grow your money faster than a cash ISA. But what is it exactly and who is it suitable for?
By Ruth Emery • Published
-
Help to Save scheme extended - get 50p for every £1 you save
The government has extended the Help to Save scheme that can help you make the most of savings with an added bonus - we explain how it works and who is eligible.
By Kalpana Fitzpatrick • Published
-
Budget 2023: How much more can you save for retirement with the new pension tax changes?
The government has axed the pensions lifetime allowance, announced in the Spring Budget. We explain what this means and how it could give you a major pensions boost.
By Stephanie Baxter • Published
-
Pension savers set for a triple boost in the Budget
Jeremy Hunt is expected to hike a trio of pension allowances, including the lifetime allowance, in his Spring Budget on 15 March. We explain what it means for you
By Ruth Emery • Published
-
Silicon Valley Bank UK bought by HSBC - what does it mean for bank customers?
Silicon Valley Bank is an American bank that you won’t have seen on the UK high street - but its collapse this weekend caused the government much alarm. We explain everything you need to know
By Sue Hayward • Published
-
Save up to £300 on your supermarket shop with cashback accounts
Three banks offer cashback on your supermarket shop, but can you use them all to max out your savings?
By Vaishali Varu • Published
-
Workplace pensions: earnings limit change makes pension saving easier for more people
New workplace pensions legislation will mean more can bag extra money from their bosses
By John Fitzsimons • Published