Bank of England finds CBDCs could add ‘programmability’ to money.

A trial conducted by the Bank of England (BoE) and the Bank for International Settlements (BIS) Innovation Hub has highlighted the potential central bank digital currencies (CBDCs) have for introducing “programmability” to money.

The trial, called Project Rosalind, showed that CBDCs could provide central banks and governments with new tools, including the ability to decide how, where, and for what people’s money should be spent. It focused on the role of application programming interfaces (APIs) in the design of CBDCs and explored over 30 different use cases that a well-designed digital currency could offer.

One of the benefits mentioned was increased convenience for consumers, such as the ability to pay via QR codes and other methods at shops and restaurants. Another benefit was the ability to use smart contract-like features, allowing individuals and businesses to allocate funds for specific purposes and trigger payments based on predefined conditions.

However, the introduction of programmable CBDCs would also increase the control that central banks and governments have over individuals’ money.

Implications beyond the UK

Although Project Rosalind was a joint initiative between BoE and BIS Innovation Hub London, its findings have implications beyond the UK. The researchers encouraged central bankers worldwide to review the results and consider the insights when designing retail CBDC systems.

Francesca Hopwood Road, Head of the BIS Innovation Hub London Centre, said the study has advanced central bank innovation in two key areas. “We believe that Rosalind can make a significant contribution to how organisations across the globe are thinking about and engaging with the design of retail CBDC systems,” she added.

Trial coincides with exploration of ‘Britcoin’

The trial coincides with the UK’s exploration of a potential digital pound, often referred to as ‘Britcoin.’ The BoE is seeking public feedback on a consultation paper produced in collaboration with the country’s Treasury. Bank of England Governor Andrew Bailey has also made the case for a digital pound earlier this year, stating that it would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.

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