Switching to a digital version of the pound could hit banks, investment and economic growth, according to one of the Bank of England’s deputy governors.

Ben Broadbent, who is responsible for monetary policy at the central bank, warned that the introduction of an electronic version of sterling could “impair” the ability of banks to make loans.

Speaking at the London School of Economics, Mr Broadbent said that "if bank lending became scarcer, or more expensive, it's likely that investment and economic activity would suffer".

Growing interest in cryptocurrencies such as Bitcoin has led to speculation that the Bank of England will launch its own digital form of cash.