The Bank of England (BoE) is considering experimenting with its central bank digital currency (CBDC), with the priority being to keep the national digital currency safe for holders. The central bank is now looking for industry players to submit design ideas for a proof-of-work digital wallet that would protect CBDC holdings. The wallet must show that the CBDC could be loaded and unloaded on it while allowing for daily payments via QR code or account IDs. It is also expected to offer support via a website.
The BoE is currently working on the design of its CBDC. The central bank has asked fintech players to submit proposal ideas by December 23. Selected submissions have five months to prepare the digital wallet in a working state for UK tax authorities to review at a later date, an official statement the BoE said.
The companies that are allowed to participate in the BoE initiative must focus on key aspects, including the creation of a apartment for the wallet, developing a compatible website that can be accessed via the browser, as well as curating a backend server to store all transaction histories for the CBDC.
“The aim of this project is to make the CBDC product more tangible for internal and external stakeholders and to examine the end-to-end user journey to sharpen the functional requirements for both the bank and the private sector,” says the BoE noted.
developer of the example digital wallet They are expected to limit their budget to £200,000 (approximately Rs 2 billion).
The BoE entered a cooperation with the Massachusetts Institute of Technology (MIT) to conduct a year-long research project to determine how the digitization of the pound sterling in a CBDC could impact the UK economy. The results of this study will be published in March next year.
The UK is currently lagging behind other nations such as India and China regarding the work on its CBDC.
While India and China are conducting trials of their respective CBDCs, nations like Jamaica and Nigeria have already launched their national digital currencies.
The UK, on the other hand, hasn’t announced a timeline for launching its own CBDC. Meanwhile, the nation has taken incremental steps to gain a holistic understanding of the digital assets sector.
Already in April, the UK recognized stablecoins as official means of payment.
After the decision at that time, Tether said it would soon issue a stablecoin pegged to the British pound (GBP).
stablecoins, like tether and Binance USDare crypto assets tied to reserve assets such as gold or fiat currencies, so even when the crypto market is down they can still generate profits based on the performance of the underlying asset.
