And finally…Bank of England hints at official digital currency

Bitcoins can be bought with near anonymity, lowering fraud risk and increasing privacy, although critics have said the same furtive qualities are a magnet for drug transactions, money-laundering and other illegal activities.

Speaking this week in London, Victoria Cleland said the bank was considering how it will proceed in a world changed by technology and in which there are now a ‘myriad of ways to pay’.

She said officials at Threadneedle Street are exploring the “growing interest” in what she described as “non-monetary based exchanges” adding that there “might be a Bank of England issued digital currency” one day.

Currently the Bank of England provides electronic accounts to banks and key financial institutions, but the public can only hold central bank money in the physical form of banknotes.

A digital currency issued by the Bank to everyone, including businesses, households and financial institutions other than banks, would mean people could store value and make payments in electronic central bank money in addition to being able to pay with cash.

Ms Cleland said that while such a facility could one day become a reality, she added that she did not envisage this in the “foreseeable future” before warning that the cash industry “should not be complacent”, and must respond to the rising popularity of other forms of payment by keeping prices competitive and continuing to innovate.