The Bank of England has set up a research division looking at how it can get involved with digital currencies such as bitcoin and the technology behind them.

It is exploring the possibility of launching its own digital currency linked to the rate of sterling, which reports suggest could get the go ahead this year.

Britcoin: The Bank of England has set up a research division looking at how it can get involved with digital currencies like Bitcoin and the technology behind it

If given the green light, a digital currency approved and regulated by the Bank of England would give security to people who want to keep their money in a digital format, which could see them complete big payments faster and without the need to go through a High Street bank.

Investors in the unregulated cryptocurrency bitcoin rode a rollercoaster of volatility toward the end of last year as it yo-yoed between $12,000 and $20,000 – having started the year at around $1,000.

Critics have warned against betting on the rogue currency and called for central banks to get involved.