The underpinning technology for the U.K.’s CBDC could use an alternative to blockchain technology.
The Bank of England (BoE) has made significant developments in its central bank digital currency (CBDC) program. Tom Mutton, director of fintech at the BoE, recently shared insights on the privacy aspect of the CBDC and why the central bank might look for other options beyond blockchain as the underpinning technology.
In the interview, Mutton said that during a recent meeting of technologists hosted by the BoE to discuss digital pound design, there was a clear disagreement on which ledger should be used for the CBDC. Thus, the bank aims to trial multiple ledger technologies, including blockchain.
Dubbed Britcoin, the development plans for a digital pound were first proposed when the United Kingdom’s Treasury Department and the BoE established a joint task force to research a U.K. CBDC in April 2021. Later, in February 2023, the bank issued a consultancy paper outlining the design of the digital pound.
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Currently, the BoE and His Majesty’s Treasury are seeking feedback from the stakeholders and technology experts on the proposed design of the CBDC. The feedback is open until June 30.
Mutton stated:
“We want to be compatible with distributed-ledger business models in the private sector, but we were not convinced that distributed ledgers offered more efficiency over conventional ledgers.”
Cointelegraph reached out to BoE to enquire about what other ledger technologies it was considering. However, the BoE did not respond by publication.
Apart from the discussions about ledger technology, Mutton also talked about the privacy aspect of the CBDC, claiming it would be focused on offering privacy to users and won’t collect personal data. He said the bank would focus on providing the infrastructure, while the private players would be responsible for the innovation.
“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 but won’t have access to their transaction data.”
Mutton claimed the BoE or the government wouldn’t have access to any user data, and even the wallet providers with limited access to that data will need consent from the users regarding what data they can store. With a focus on retail, the BoE had stated previously that the digital pound could co-exist with private stablecoins.
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