In a significant development within the Bank of England’s (BoE) central bank digital currency (CBDC) program, director of fintech, Tom Mutton, sheds light on the privacy aspect of the proposed digital pound and reveals the bank’s exploration of alternative ledger technologies. In a conversation with Bloomberg columnist, Merryn Somerset Webb, Mutton claimed that the BoE aims to trial multiple ledger options, including blockchain, as it seeks to strike a balance between compatibility with distributed-ledger business models and the efficiency offered by conventional ledgers.
Referred to as Britcoin, the digital pound initiative was initially introduced when the UK Treasury Department and the BoE formed a joint task force in April 2021. Their collaborative effort led to the issuance of a consultancy paper outlining the design of the digital pound in February 2023.
As the BoE and the Treasury actively seek feedback from stakeholders and technology experts on the proposed CBDC design, the deadline for providing input is set for June 30.
Mutton highlighted the divergence of opinions on the choice of ledger technology during a recent technologists’ meeting hosted by the BoE to discuss digital pound design. This disagreement prompted the BoE to consider exploring multiple ledger technologies beyond blockchain. However, the specific alternatives being considered were not disclosed by the bank.
While discussing privacy concerns, Mutton emphasized the BoE’s commitment to ensuring user privacy and stated that the CBDC would not collect personal data. The bank’s focus lies in providing the necessary infrastructure, leaving private players responsible for innovation.
Mutton clarified, “There will be no data shared with the Bank of England, we will know what transactions have happened but we will have no data on the individual who did it. While the wallet provider would have the user data, they won’t have access to their transaction data.”
Addressing the wider impact of the CBDC on the financial sector, the BoE has expressed its intention to coexist with private stablecoins, particularly with a focus on retail applications.
In April 2023, the BoE initiated the recruitment of experts to form a team dedicated to developing the CBDC. This project, still in the research and development phase, is expected to bring in up to 30 professionals. The roles of Digital Pound Security Architect and Digital Pound Solutions Architect have been advertised on the BoE’s careers page, offering a salary of up to £80,000 ($99,000). Additionally, the Treasury has sought a Head of Central Bank Digital Currency to oversee the project.
The potential adoption of alternative ledger technologies by the BoE signals the bank’s commitment to exploring all avenues for optimizing efficiency in the CBDC system. By prioritizing user privacy and putting the onus of data protection on wallet providers, the BoE aims to create a digital pound that safeguards sensitive information. This forward-thinking approach has the potential to redefine the landscape of the UK’s financial sector and establish the country as a global leader in CBDC implementation.