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.
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.
While these experiments focus on the wholesale level, the BoE acknowledges the broader implications for the financial ecosystem and the need for careful consideration of retail CBDC in the future. The central bank’s approach reflects a commitment to understanding the potential benefits and challenges of digital currencies while ensuring financial stability and the integrity of the monetary system.
