A significant study conducted by the Bank for International Settlements and the Bank of England found that a digital currency issued by a central bank for retail use could make peer-to-peer payments more affordable and convenient.
The Bank of England (BoE) is one step closer to launching its central bank digital currency branded “Britcoin” as a result of the completion of Project Rosalind.
In July 2022, the Bank of International Settlements and the Bank of England initiated a joint experiment to determine how prototypes of an application programming interface (API) might be implemented in retail CBDC transactions.
According to a report released on June 16 that summarised phase two of Project Rosalind, a CBDC could make payments between individuals cheaper and more efficient while also allowing businesses to develop new financial products that combat fraudulent financial activity.
Overall, the study developed 33 API capabilities and investigated “more than 30 retail CBDC use cases.”
In addition to examining how a CBDC would operate on smartphones, retail vendors, and online retailers, the study also examined the concept of “programmability” — a term that refers to the ability to programme digital currency to perform in a particular manner when certain conditions are met.
The programmability of CBDCs has been met with significant scepticism, as critics assert that a CBDC could be programmed to “work against” its users.
The study concluded that a “well-designed” API layer could allow a central bank to interact with the private sector in order to “securely provide” retail CBDC payments.
Project Rosalind, from the #BISInnovationHub London Centre & @bankofengland, explored how a universal and extensible #API layer could connect central bank and private sector infrastructures and facilitate retail #CBDC payments https://t.co/HL7EmI7RWx pic.twitter.com/kDeo0yhrsR
— Bank for International Settlements (@BIS_org) June 16, 2023
Francesca Road, head of the BIS London Innovation Hub, stated in a press release, “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 variety of use cases.”
Despite the positive results of Project Rosalind, BoE Deputy Governor Jon Cunliffe stated that a definitive decision regarding whether or not the country will initiate a CBDC is still “some years” away.
Cunliffe reportedly told delegates of Politico’s Global Tech Day conference on June 16 that the likelihood of a CBDC project proceeding are currently “seven out of ten.”
On the same day that Project Rosalind’s findings were published, enterprise blockchain Quant Network announced its participation in the study as a vendor. Within 12 hours of the announcement, the price of Quant’s native QNT token increased by more than 20%, from $96 to $117.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.