The BoE is seeking consultation for developing a CBDC sample wallet for the retail sector. The central bank has opened a bidding process through December 23, with the winner receiving an initial five-month contract worth £200,000.
The Bank of England (BoE) has launched a bidding process for a proof-of-concept sample wallet for its upcoming central bank digital currency (CBDC) – Digital Pound. Last Friday, Chancellor of Exchequer Jeremy Hunt introduced a set of reforms for the country’s financial service sector that included plans to issue a digital currency.
Instead of developing a user wallet by itself, the BoE is working with third parties to “explore the end-to-end user journey” of a sample wallet and improve its functionality for the banking and retail sector. The central bank which will conduct core operations of the CBDC on a blockchain ledger, released an API (application programming interface) for private-sector wallet developers, and is working on framing payment scheme rules and user experience guidelines for the product. With its consultation process, the BoE aims to make the CBDC more tangible for internal and external stakeholders, and support future exploration of other functionalities such as offline payments and KYC (Know Your Customer) procedures for new users.
Applicants must produce a mobile app for the wallet supported on Android and iOS devices, a website, an example merchant website, and a back-end server to call the core ledger API, operate the app and website, and store user data and transaction history.
The digital pound is being developed under ‘Project Rosalind’, a joint initiative between the BoE and the Bank of International Settlements (BIS). Led by the BIS Innovation Hub’s London Centre, the project’s objective is to develop an API that will enable a central bank ledger to interact with private sector service providers to conduct safe and secure retail CBDC transactions. The bidders will also contribute to the development of Project Rosalind by integrating their applications to the Rosalind API.
In February of this year, the central bank collaborated with the Massachusetts Institute of Technology (MIT) to conduct a 12-month research programme on the prospect of a digital currency. The program headed by MIT’s Digital Currency Initiative (DCI) is exploring potential technical challenges, trade-offs, opportunities and risks involved in designing a CBDC system.
“The plan to publish a consultation next year on CBDC is a crucial step in our policy development, especially as we further our thinking on the pressing issues at hand. What it will do is provide a platform for interested parties and relevant groups to engage with the key questions on the merits of CBDC, and whether the public sector should advance to a development phase,” said BoE Deputy Governor for Financial Stability, John Cunliffe.
The central bank is expected to publish its findings at the end of the period of research. If the results conclude that a CBDC is operationally and technically robust for Britain’s retail sector, then the BoE will begin working on the product.
The BoE will accept applications for the proof-of-concept CBDC sample wallets until December 23rd. The winning bidder will receive an initial five-month contract with a budget range of £200,000.