The Bank of England is set to launch a Digital Pound Lab, outlining its approach for the design phase of a potential digital currency, often referred to as “Britcoin.”
In a sandbox environment, the Digital Pound Lab will facilitate hands-on experimentation to test API functionality, innovative use cases, and potential business models for Payment Initiation Providers (PIPs) and Electronic Money Institutions (ESIPs). While the Bank’s existing consultation groups—the Engagement Forum and the Academic Advisory Group—will continue their work, the Technology Forum will be disbanded. The Bank emphasizes that technology engagement will remain a focus but will be conducted in a more direct and detailed manner through the new Lab.
Concurrently, the Bank has released the first in a series of design notes that highlight its emerging thoughts on specific elements related to a digital pound. These notes outline the key aspects that the Bank and HM Treasury will investigate while developing the digital currency blueprint.
This blueprint forms one of four workstreams within the digital pound design phase. Its aim is to create a comprehensive framework for the digital pound, covering technological, operational, ecosystem, commercial, regulatory, and financial considerations, along with the respective roles of both the Bank and the private sector in delivering the product.
Upon completion, the blueprint will serve as a record of the proposed model and design for a potential digital pound, forming the foundation for evaluating its benefits and costs.
The Bank and HM Treasury have suggested a public-private platform model for the digital pound’s implementation, where the Bank would create and manage the ledger while regulated private firms would access this core infrastructure through APIs. These private entities would handle all user-facing interactions, managing customer information and developing innovative services utilizing the digital pound.
The Bank has clarified that no decisions have been made regarding the actual construction of a digital pound. The design notes do not reflect final policy or design choices, nor do they constitute formal proposals.
At the conclusion of the design phase, and considering changes in the broader payments landscape, the Bank and the Government will determine whether to proceed with building a digital pound. If such a decision is made, the digital currency would only be rolled out after corresponding primary legislation has been enacted by Parliament.