Dubbed ‘Britcoin’, the cryptocurrency would be a new form of digital money issued by the Bank of England and for everyday use by households and businesses. The Bank of England said, if introduced, it would exist alongside cash and bank deposits, rather than replacing them.

Chancellor Rishi Sunak announced plans for Britcoin in April and the Bank of England and HM Treasury have now announced the next steps towards launching the cryptocurrency.

In 2022, the Treasury and the Bank of England will launch a consultation which will set out their assessment of the case for a UK CBDC, including the merits of further work to develop an operational and technology model for a UK CBDC.

It will evaluate the main issues, consider the high-level design features, possible benefits and implications for users and businesses, and considerations for further work.

This consultation will form part of a ‘research and exploration’ phase and helps to inform policy development over the next few years.

No firm decision has been made on whether to introduce a CBDC in the UK, which would be a major national infrastructure project. The 2022 consultation will lead to a decision on whether the authorities are content to move into a ‘development’ phase which will span several years.

A technical specification would follow the consultation explaining the proposed conceptual architecture for any CBDC. This could involve in-depth testing of the optimal design for, and feasibility of, a UK cryptocurrency.

The Bank of England says that if the results of this ‘development’ phase conclude that the case for CBDC is made, and that it is operationally and technologically robust, then the earliest date for launch of Britcoin “would be in the second half of the decade”.

John Glen, economic secretary to the Treasury, said: “This consultation will begin an open discussion on the role a UK central bank digital currency might play in the UK. I’d encourage everyone to contribute to the discussion so we can explore the opportunities this could bring, as well as understanding any risks it may pose.”

Jon Cunliffe, deputy governor for financial stability, said: “The plan to publish a consultation next year on CBDC is a crucial step in our policy development, especially as we further our thinking on the pressing issues at hand. What it will do is provide a platform for interested parties and relevant groups to engage with the key questions on the merits of CBDC, and whether the public sector should advance to a development phase.”