The UK has become the latest country to look into the potential of having a central bank-backed digital currency, following similar moves by China and Sweden.
British authorities are exploring the possibility of creating a new digital currency that UK Chancellor of the Exchequer Rishi Sunak indicated could be known as "Britcoin".
The Bank of England and the Treasury said on Monday that they will work together to assess the benefits of a central bank digital currency, at a time when cash payments are generally on the decline, partly as a result of the coronavirus pandemic.
The bank said the new currency - if it comes to pass - would be a new form of currency for use by households and businesses and would exist alongside cash and bank deposits rather than replacing them.
Digital currencies, which are only available in digital or electronic form, are already being explored or even implemented in several other countries, with many proponents drawing inspiration from the success of Bitcoin and other cryptocurrencies.
However, digital currencies, like the one being considered in the UK, are different from cryptocurrencies like Bitcoin as they are issued and regulated by state authorities.
Growing global interest
Currently, only the Bahamas has such a currency, though China is trialing it in several cities. Sweden has indicated it could have its own digital currency by 2026, while the European Central Bank (ECB) has indicated an electronic euro might be created within four years.
At the end of March, the Eastern Caribbean became the world's first currency union to issue its own digital currency - called "DCash" - for use on four island countries, St Lucia, Grenada, Antigua, and Barbuda, and St. Kitts and Nevis.
The new British task force is part of a series of measures that Treasury chief Sunak hopes will help the UK’s financial technology sector.
"Our vision is for a more open, greener, and more technologically advanced financial services sector," he told a fintech conference. "And if we can capture the extraordinary potential of technology, we’ll cement the UK’s position as the world’s preeminent financial centre".
Promoting Monday's announcement on Twitter, Treasury chief Sunak posted the word "Britcoin?" in response to the taskforce launch.
News of the new taskforce comes just days after Turkey announced a ban on the use of cryptocurrencies to make payments for goods and services.