The BoE is making progress with developing and launching a digital pound, following a successful Project Rosalind CBDC test.
The Bank of England (BoE) is getting closer to launching its central bank digital currency (cbdc) after his lengthy test project on the potential benefits of the technology. The BoE launched Project Rosalind last year to help decide whether to float a CBDC.
The BoE launched the CBDC project in collaboration with the Bank for International Settlements (BIS) to make the use of CBDC practical. BoE’s CBDC could improve the payments landscape, according to a report published by BIS on Friday. The report states that a CBDC could help people make payments faster and easier. For organizations, the asset will help launch financial products and detect duplicity or fraud.
One way the BoE’s CBDC could help reduce fraud is by scheduling settlements at a specific time or after a specified event. For example, an online seller may decide to pay only after the customer has confirmed that the products received are satisfactory.
As per BIS report:
“A well-designed API layer can work with a variety of private sector applications and central bank ledger designs and that a set of simple and standardized API functionalities can support a diverse range of use cases.” Is.”
The results of the first phase have been positive. According to the BoE, the development and launch of a CBDC is “likely” and could happen sometime later. However, the bank has not fixed any specific date whether it will go ahead or not. It said a series of consultations are needed, in addition to support from the UK Treasury.
London-based blockchain technology company Quant worked on the CBDC project between the BoE and the BIS. Gilbert Vardien, founder and CEO of Quant, praised the initiative as he believes that the current UK financial system is not suitable for a digital society.
Testing the BoE’s CBDC
The first phase of the CBDC began last year and included eight organizations from finance and technology. Using Quant’s framework, Mastercard created a CBDC debit card, while Bank of Canada created an account for children that paid out a fixed amount when the child completed a chore.
Other participants include Barclays plc, BNY Mellon and Reverse, Barclays used the CBDC to test cash payments issued to sellers after buyers received their items in good condition.
Verdien said this “conditional logic” feature is great for preventing fraud, rather than making it harder to defend against fraud. Verdien also said that these features could make the digital pound one of the most preferred currencies in the world.
BoE and UK Treasury officials believe CBDC will have many benefits. Ben Broadbent, BoE’s deputy governor for monetary policy, said the digital pound would be cheaper for businesses because of lower settlement costs and faster access to online payments.
Many expect the digital pound, affectionately referred to as “Britcoin,” to launch in late 2023.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to strip crypto stories down to the basics so that anyone anywhere can understand without a lot of background knowledge. When he is not delving deep into crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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