- The study focused on the use cases of CBDCs in P2P transfers.
- The announcement comes amid division among policymakers on rCBDC.
The Bank of England (BoE) and the Bank for International Settlements (BIS) have completed a study on the implementation of a retail central bank digital currency (CBDC). Dubbed ‘Project Rosalind’, the year-long study focused on the viability and the design of a digital pound.
Specifically, Project Rosalind considered the use cases of a retail CBDC, among them, peer-to-peer transfers, retail payments for goods and services, and small-value business transactions. The project also analyzed important design considerations for the currency.
“The Rosalind experiment has advanced central bank innovation in two key areas: by exploring how an API layer could support a retail CBDC system and how It could facilitate safe and secure CBDC payments through a range of different use cases”, said Francesca Hopwood Road, Head of the BIS Innovation Hub London Centre.
“Active collaboration with the public and private sectors to identify and explore these use cases has been at the heart of this. We believe that Rosalind can make a significant contribution to how organizations across the globe are thinking about and engaging with the design of retail CBDC system,” she added.
Division Among Policymakers
Even as BoE and BIS progress towards implementing a digital pound for retail uses, there is still division among policymakers on whether there is a need for the same. A report published by the House of Lords Economic Affairs Committee argued that a retail CBDC could present financial stability and privacy protection challenges.
Some of the challenges identified by the committee include the risk of state surveillance of people’s spending choices and an increase in the powers vested with the central banks. The legislators also pointed out that there is the risk of creating a centralized point of failure that can be a target for criminals.
Meanwhile, The Distributed most recently reported that the Hong Kong Monetary Authority (HKMA) was laying the groundwork for the implementation of a retail CBDC. HKMA is looking particularly at how a retail CBDC can address volatility in the cryptocurrency space and the emerging area of decentralized finance (DeFi).
