What happened to the world’s longest happ Officials said on Monday that Britain is pushing ahead with work on a potential digital pound that could be in use by the second half of this decade and help prevent the fragmentation of an electronic cash system dominated by tech or banking behemoths.

As part of a new consultation on the design of such a system, the Bank of England and the Finance Ministry stated that a central bank digital currency (CBDC) was likely to be required later this decade.

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“While cash is here to stay, a digital pound issued and backed by the Bank of England could be a new way to pay that’s trusted, accessible and easy to use,” finance minister Jeremy Hunt said in a statement.

“That’s why we want to investigate what is possible first, whilst always making sure we protect financial stability.”

Governor Andrew Bailey of the Bank of England stated that the implications of a digital pound, including privacy concerns, must be considered.

“This consultation and the further work the Bank will now do will be the foundation for what would be a profound decision for the country on the way we use money,” he said.

When he was finance minister in 2021, Prime Minister Rishi Sunak asked the BoE to look into the case for a CBDC.

Other central banks, including the Federal Reserve of the United States and the European Central Bank, are considering launching their own CBDCs, and 11 countries have already done so.

The digital pound, unlike cryptoassets, would be issued by the central bank rather than the private sector, and its value would be fixed.

Individuals would not be able to open accounts with the BoE directly under Britain’s proposals. They would instead have accounts with private digital wallet providers, who would provide digital pounds via public infrastructure.

Officials stated that a digital pound, while providing similar services to those already available to consumers, would avoid the risk of competing, non-interoperable systems run by tech behemoths or banks, and would drive future innovation.

CBDCs gained traction after Facebook proposed a crypto-asset called Libra in 2019 that would have tied its value to a basket of currencies. It was eventually decommissioned.

In an interview published on Monday, the new head of innovation at the Bank of International Settlements, a forum for central banks, told Reuters that CBDCs would face geopolitical constraints.

China has carried out the world’s largest cross-border CBDC trial to date.

To avoid the risk of upsetting the financial system, Britain will impose initial limits on how much CBDC individuals or businesses can hold, according to the BoE and finance ministry.

Deputy Governor Jon Cunliffe of the Bank of England is scheduled to deliver a speech on Tuesday to update the finance industry on the BoE’s CBDC work.

(Adapted from NBCNews.com)