The Bank of England plans to begin research into the arrival of a retail CBDC by December. It will take at least five years before it is available to the public and again the form of digital book offered will be via an account. Its arrival on a blockchain will therefore not be anytime soon!
The Hamilton Project implements the CBDC
The Hamilton Project, which implements the Central Bank Digital Currency (CBDC), is under the supervision of the Bank of England, the Federal Reserve Bank of Boston and the Digital Currency Initiative (DCI).
According to them, no blockchain is needed for the deployment of the CBDC. Distributing a large number of pounds under the control of a single central player does not fit the trust assumption of the Hamilton project. This creates performance bottlenecks as in Federal Reserve currency, digital currency is not a reliable solution.
Added to this, the design of CBDCs is granular. Tokens or accounts are limited and insufficient to be able to choose the storage, access, and intermediation of data in CBDCs.
The Bank of England may consider CBDC under certain conditions
The central bank does not allow tokens due to the fact that they operate anonymously. To be credible at the level of banking institutions, digital identity must be integrated into the deployment of the CBDC. This operation requires a lot of time both in the development of its architecture and in the establishment of the requirements, objectives and constraints related to the digital currency.
On the other hand, players in the cryptosphere are calling on policy makers and regulators to define their expectations of digital currencies. Their goal is to deliver a service that inspires widespread trust. For example on the client interface, wallets can support account balance view and coin-specific view for user.
Wholesale CBDC is more appropriate to Bank of England expectations
Wholesale CBDC for corporates and institutions requires a full panoply of smart contrast or smart contract capability and more complex instrument trading. Which makes it more appropriate than the retail CBDC and therefore can be easily found on the blockchain.
This is because the retail CBDC is only solvent when it comes to programmability and not smart contracts and blockchain. Be aware that the Bank of England and other central banks are considering two-tier systems to control the digital currency system while having it executed by a third party (PIP). Which makes it a long process.
The Bank of England believes retail CBDC is more appropriate through the transfer of account balances. Wholesale CBDC is easy to implement on blockchains due to their feature. Either way, CBDC is a viable alternative for transferring limited balances between offline devices hence from people to cash.
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