A state-backed digital pound is likely to be launched later this decade, according to the Treasury and the Bank of England, the BBC reports.
Both institutions want to ensure the public has access to safe money that is easy to use in the digital age.
Chancellor Jeremy Hunt said the central-bank digital currency (CBDC) could be a new “trusted and accessible” way to pay.
But it will not be built until at least 2025.
“We want to investigate what is possible first, whilst always making sure we protect financial stability,” Mr Hunt said.
The Treasury and the Bank of England will formally start a consultation for the digital currency, on Tuesday.
Cryptocurrencies are not backed by a central bank and the value can shoot up and down rapidly.
But while it may use technology similar to cryptocurrencies such as Bitcoin and Ethereum, the digital pound, issued by the Bank of England, would be less volatile. Ten digital pounds will always be worth the same as £10 in cash, the Treasury says.
Prime Minister Rishi Sunak asked the Bank of England to look into backing a currency, in 2021, as chancellor.
And in October 2022, Mr Sunak’s Financial Service Minister Andrew Griffith warned a lengthy delay could create problems for the economy.