Central Banks Successfully Test Over 30 CBDC Use Cases, Including Offline Payments
A collaborative experiment involving central banks, namely the Bank for International Settlements (BIS) and the Bank of England, has demonstrated that an API layer has the potential to enable a wide range of payment scenarios for central bank digital currencies (CBDCs).
The experiment aimed to establish connections between monetary authorities and the private sector to facilitate retail digital currency payments, as outlined in a recent report.
The London Innovation Hub of the BIS and the Bank of England jointly developed 33 application programming interface (API) functionalities to test over 30 use cases for CBDCs, including offline payments.
APIs, which enable communication and data sharing between computer programs, were examined as a means to support retail CBDCs and ensure secure and reliable payments across various scenarios.
The experiment explored diverse payment options, such as online, offline, and in-store payments using QR codes, mobile phones, and smart cards. The project also investigated the facilitation of micropayments. The study concluded that the API layer can seamlessly work with different ledgers.
The Bank of England is currently engaged in consulting on the possibility of a digital pound and has stated that it would host the centralized ledger and API for a potential digital pound, enabling private sector firms to access the ledger and provide services like automated payments.
The experiment, known as “Project Rosalind,” emphasized the multitude of ways in which the market can respond and engage with these advancements.
The BIS remains committed to conducting experiments in various areas to contribute to the ongoing conversation surrounding CBDCs, given the increasing interest from jurisdictions worldwide.
The exploration spans both wholesale and retail CBDCs, with a focus on dimensions such as cross-border transactions, offline usability, and security.
The BIS aims to address these important aspects of CBDC exploration, which are receiving growing attention from central banks.
In the context of Project Rosalind, blockchain network Quant and digital solutions platform UST collaborated as part of the vendor team, with Quant providing the underlying infrastructure and blockchain platform, secure smart contracts, and interoperability of central bank ledgers, while UST developed the frontend Rosalind API layer.
