Treasury ministers are studying the design, manufacture and packaging of British banknotes - at present done by the Bank of England - to discover whether the private sector could do it more cheaply and efficiently.
But the Bank is determined to keep printing its own money, for reasons of cost and security.
A Treasury spokesman said the matter was under review, though he expected no immediate decision. 'The question is whether it would be more efficient in the private sector or the public sector. Other countries do it other ways.'
Germany contracts out half its note production to a private company, and the currencies of the Netherlands, Portugal, Switzerland and Canada are all made commercially. Worldwide, 50 of the biggest central banks have kept control of printing and some 120 countries use commercial printers.
A Bank of England spokeswoman said: 'We believe our note production is extremely competitive, both domestically and overseas.'
UK note production is among the cheapest in Europe, including countries that contract the business out. The Bank fears that privatisation could add extra costs, partly because it would still want to oversee the operation, and mean a loss of security.
The Bank's banknote operation cost pounds 58m in the year to February. Its printing works in Loughton, Essex, designs, prints, packages and distributes new notes, and destroys old ones. The Bank manufactured and issued 1.4 billion notes last year at a cost of 2.5p each. About pounds 17bn of notes are circulating.
De La Rue, a British firm that makes notes for 100 countries including Scotland, would be eager for the lucrative English contract.Reuse content