The Bank of England (BoE) is a step closer to launching its central bank digital currency (CBDC) dubbed “Britcoin” following the conclusion of a trial study called Project Rosalind. The Bank for International Settlements (BIS) along with the BoE launched the joint experiment in July 2022 to explore how prototypes of an application programming interface (API) could be implemented in retail CBDC transactions. With a CBDC, payments between individuals could be made cheaper and more efficient while allowing firms to create new financial products that work to reduce fraudulent financial activity.
The concept of CBDC programmability has been met with considerable skepticism, as critics claim a CBDC could be programmed to “work against” those who use it. However, a well-designed API layer could enable a central bank to interact with the private sector to “safely provide” retail CBDC payments. Francesca Road, head of the BIS London Innovation Hub, said the Rosalind experiment has advanced central bank innovation.
Despite the positive findings yielded in Project Rosalind, the BoE Deputy Governor Jon Cunliffe said that a final decision on a CBDC is still “some years” away. On the same day the findings from Project Rosalind were released, enterprise blockchain Quant Network announced its role as a vendor in the study. The announcement saw the price of Quant’s native QNT token surge more than 20% from $96 to $117 within 12 hours.
While offering a promising outlook on the future of digital currencies, the process of implementing a CBDC is not without its challenges. One major concern is whether a CBDC could inadvertently harm the financial privacy of its users. The idea of a CBDC being used as a tool for surveillance is a valid concern for some, and addressing these concerns will be crucial in ensuring the successful adoption of a CBDC.
In conclusion, while the future of a CBDC like Britcoin comes closer to reality, there are still hurdles to overcome. Skepticism surrounding CBDC programmability and concerns about user privacy contribute to the ongoing debate surrounding the implementation of a retail CBDC. It remains to be seen how these concerns will be addressed in the years to come, as central banks continue to work towards creating a safer and more efficient financial landscape for consumers.
Source: Cointelegraph
