Blockchain for Banking News

Bank of England CBDC wallet project progresses

digital pound currency cbdc

In December, the Bank of England opened applications for central bank digital currency (CBDC) wallet suppliers. It received 28 responses, of which only 20 were complete. Of the applicants for the £200,000 digital pound project, nine are SMEs and 11 are large companies. Five will be shortlisted tomorrow, with the winner to be decided at the end of the month following presentations. 

As the central bank previously stated, the proof of concept wallet is part of Project Rosalind, an initiative of the BIS Innovation Hub in London to develop application program interfaces (APIs) for CBDC to support integration with private sector payment providers.

The project itself is not that small because it’s more than a wallet. It also includes a backend to store transaction data, including personal data (no real data for now), which integrates with the core CBDC ledger via the Rosalind APIs. So the backend mimics the CBDC data that a bank or payment provider would store.

The central bank published responses to a series of questions for the wallet project that revealed a few more details about its direction. 

India’s CBDC project features fixed denomination tokens. The Bank of England says the wallet should assume no fixed denominations for the digital pound.

In terms of functionality, the wallet will allow users to label and separate their funds for different purposes. Additionally, conditional payments will lock funds until specific conditions are met.

These sorts of features show the focus is on the relevant value-added functionality, with other basic functionality out of scope, such as KYC or interoperability of the CBDC with other types of money. Offline payments are also not in scope.

The central bank is keen to use QR codes extensively for both consumer and business wallets and at a technical level, prefers cross platform solutions rather than bespoke apps for iPhone or Android.

Meanwhile, in December, the new Chancellor of the Exchequer said the Treasury planned to accelerate a consultation on the potential design for a digital pound which we might expect imminently.

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