Bank of England Begins Testing CBDC Settlements
The Bank of England (BoE) is initiating a trial to evaluate its Real-Time Gross Settlement (RTGS) system and wholesale central bank digital currency (wCBDC).
This trial, set to unfold over the next six months, will assess the settlement abilities and compatibility of these systems, as outlined in a recent discussion paper. The experiments will compare CBDC settlements with those of non-CBDC central bank money, utilizing a synchronization network that works with current RTGS systems.
Evaluating the Role of Distributed Ledger Technology
The BoE is cautiously optimistic about distributed ledger technology (DLT), acknowledging that its broader adoption by financial markets is still uncertain. The central bank is updating its RTGS system, CHAPS, with a new version expected soon after a recent crash.
READ MORE: ECB Cyber Test Exposes Weaknesses in Bank Recovery Plans
Key Experiments
Five key experiments are planned:
- Delivery-Versus-Payment (DvP) with Securities: These tests will build on Project Meridian findings, increasing in complexity.
- Foreign Exchange Payment-Versus-Payment (PvP): Testing conditional settlements in multiple currencies, following the model used by Banque de France.
- Multi-Currency Platform: Assessing the use of assets and multiple currencies on a single platform, potentially within Project Agora.
Design and Implementation Insights
The BoE’s paper highlights design considerations, noting that previous wCBDC tests have minted currency from existing RTGS funds rather than creating it natively. The control of the CBDC platform, whether by the central bank or a third party, could affect the system’s resilience and independence.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
