The Bank of England (BoE) is set to embark on a series of experiments to explore the potential of wholesale central bank digital currency (wCBDC) and synchronization. This initiative aims to assess the capabilities and interoperability of these systems within the context of the central bank’s Real-Time Gross Settlement (RTGS) service.
Deputy Governor Sarah Breeden has written in the@FT as we publish a Discussion Paper on the@bankofengland's approach to innovation in money and payments.
The UK must continue to innovate in digital payments https://t.co/AFGBO5BIch
— Bank of England Press Office (@BoE_PressOffice) July 30, 2024
The experiments will delve into comparing CBDC settlement with the synchronization of traditional central bank money, drawing on insights from the ongoing Project Meridian. Synchronization, a mechanism enabling communication between separate ledgers, allows for the earmarking of funds and settlement of payments. Wholesale CBDCs, digital tokens issued by central banks for institutional use, could facilitate interactions with programmable platforms.
The BoE intends to test wCBDC transactions modeled after Banque de France’s approach, exploring asset and multi-currency management on a unified platform within the framework of Project Agora. The bank emphasizes the importance of maintaining the “singleness of money” across digital and traditional currencies, ensuring seamless interchangeability.
This experimental phase will involve collaboration with the Treasury, Payments Systems Regulator, and Financial Conduct Authority to navigate the evolving payments landscape and identify potential opportunities and risks associated with financial technology advancements. The BoE seeks industry feedback to inform the design of functionalities supporting industry innovation, such as extended RTGS settlement hours and a synchronization interface connecting RTGS to external ledgers.
