• The Bank of England and Bank for International Settlements Innovation Hub have conducted a trial on the potential of central bank digital currencies (CBDCs).
• The trial, named Project Rosalind, found that CBDCs could introduce “programmability” to money.
• This would give central banks and governments new tools to decide how, where, and for what people’s money should be spent.
Project Rosalind Findings
The Bank of England (BoE) and the Bank for International Settlements (BIS) Innovation Hub recently conducted a trial called Project Rosalind which focused on the role of application programming interfaces (APIs) in the design of CBDCs. Results from this trial highlighted the potential CBDCs have for introducing “programmability” to money. With this programmability comes new tools that central banks and governments can use to decide how, where, and for what people’s money should be spent.
Potential Benefits
By introducing programmable CBDCs, there could be several benefits including an increase in convenience for consumers who would be able to pay via QR codes or other methods at places like shops or restaurants. Additionally, smart contract-like features familiar from blockchain technology could enable individuals and businesses to trigger payments based on predefined conditions.
Implications Beyond the UK
The researchers involved in Project Rosalind were keen to emphasize that their findings have implications beyond the United Kingdom. They encouraged central bankers worldwide to review these results when designing retail CBDC systems in order to benefit from this innovation.
Commentary
Francesca Hopwood Road, Head of the BIS Innovation Hub London Centre commented in a press release stating that “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”.
Conclusion
Project Rosalind has pushed forward innovation on CBDCs by examining over 30 different use cases they offer with its associated potential benefits such as increased convenience for consumers as well as smart contract-like features which may enable individuals and businesses alike allocate funds for specific purposes with more ease than before. Central bankers worldwide are encouraged to review these results when designing retail CBDC systems so as not miss out on this innovation opportunity.