As central banks across the world are conducting pilot tests for the central bank digital currency (CBDC), the Bank of England (BoE) officials have expressed concerns about whether the digital currency should leverage blockchain technology. Speaking at the Merryn Talk Money Podcast, the director of the fintech at BoE Tom Mutton admitted that in a recent meeting on tech matters, the members present disagreed on the design for the UK CBDC, commonly known as Britcoin.
Mutton lamented that all the participants had different views concerning launching Britcoin on distributed ledgers over conventional ledgers. At the debate, Mutton stated that the BoE desired to design Britcoin to be compatible with the distributed ledger business system in the private sector. He added that Britcoin exhibited an underlying structure that is currently open.
Will Britcoin be Launched on Blockchain Network?
It was reported that the attendees engaged in heated exchanges on whether Britcoin should be built on a private network or public software.
Beyond this, at the meeting, the officials discussed the proposed designs for Britcoin in detail. The members argued on whether the proposed design for the digital pound should host other systems such as banks and different CBDCs. Other members expressed concerns about the interoperability of the digital pound.
Responding to the multiple questions asked by the officials, the BoE pledged to provide further details during the primary design phase for Britcoin.
In a recent study conducted by BoE, the officials noted that Britcoin, backed by an innovative application programming interface (API), has multiple use cases.
The researchers observed that an API-oriented digital pound would provide businesses, investors, and consumers with a platform to automate payments using the programmability element. Commonly programmability feature enables a system or a network to accept new instructions.
In March, the BoE invited high-profile tech and fintech firms to the CBDC Technology Forum. It was reported that Amazon, JP Morgan, Barclays, and IBM were among the members present at the forum.
In BoE minutes, the attendees proposed the creation of a sub-group that will assist the bank in extensively researching various architectures suitable for Britcoin.
In 2021 the BoE introduced a task force to work with officials from HM Treasury in exploring the CBDC. Despite the efforts made by the BoE in collaboration with other UK regulatory agencies, Mutton confirmed that the launching of the CBDC will take years.
BoE Set to Explore Suitable Design for Britcoin
In a Bloomberg report, the BoE announced plans to conduct trial tests for the digital pound on different types of ledgers. The BoE will launch the CBDC on ledgers operated in the public and private sectors.
In the meantime, the BoE is seeking public opinion on the CBDC proposal through a consultation paper which will be closed on June 30. The information gathered from the public will later guide the BoE in developing the digital pound.The bank plans to explore the CBDC project before making the final decision.
While other central banks are examining how CBDC can be used as either an alternative to cash or a conventional payment method, the BoE is still researching design and effective ways to implement the digital pound.
Reportedly the CBDC has similar characteristics as stablecoins since they are both backed by sovereign currency. The only difference is that CBDCs are issued by government agencies, while private companies administer stablecoins.
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