Bank of England Nears Launch of CBDC Following Successful Project Rosalind Trial
The Bank of England (BoE) has made significant progress in its plan to introduce its central bank digital currency, known as “Britcoin,” after completing a trial study called Project Rosalind.
In collaboration with the Bank for International Settlements (BIS), the BoE initiated Project Rosalind in July 2022 to explore the implementation of application programming interfaces (APIs) in retail transactions involving central bank digital currencies (CBDCs).
A recent report summarizing phase two of Project Rosalind, published on June 16, highlighted the potential of CBDCs to enhance efficiency and reduce costs in individual payments. Furthermore, it noted that CBDCs could enable businesses to create innovative financial products while mitigating fraudulent activities.
The successful completion of Project Rosalind demonstrated that a well-designed API layer could effectively integrate diverse private sector applications and central bank ledger designs. It revealed that a standardized set of simple API functionalities could support a wide range of use cases.
During the initiative, which was jointly conducted by the BIS Innovation Hub London Centre and the Bank of England, a total of 33 API functionalities were developed and over 30 retail CBDC use cases were explored.
These use cases spanned various domains, including peer-to-peer transfers, retail payments for goods and services, and small-value business transactions. The project tested multiple payment options, including online, in-store, and offline retail CBDC payments using near-field communication, point-of-sale interactions, QR codes, mobile phones, smartcards, biometric devices, and smart assistants. Some use cases also investigated private sector programmability and micropayments.
Project Rosalind focused on developing a universal and extensible API layer to facilitate connections between central bank and private sector infrastructures, streamline CBDC payments, and foster innovation. The project was based on a two-tier CBDC model, where the central bank issues the CBDC and provides the ledger infrastructure, while the private sector offers user-facing services.
Furthermore, the project offered valuable insights and lessons on various aspects of a retail CBDC system, including API design, privacy models, security, standards, offline payments, private sector programmability, and the roles and responsibilities of different ecosystem participants.