Digital pound to prioritise privacy with pseudonymous nature: BoE CBDC Chief

Bank of England's CBDC program prioritises privacy and explores alternative ledgers, shaping the future of digital pound development

By Shashank Bhardwaj

Published: Jul 3, 2023 06:15:20 PM IST

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The Bank of England (BoE) has taken significant strides in its Central Bank Digital Currency (CBDC) program, focusing on privacy and considering alternative ledger technologies. Tom Mutton, the BoE's director of fintech, recently shed light on the privacy aspect of the CBDC and the potential use of different ledgers as the underlying technology.

During a recent meeting hosted by the BoE to discuss the design of the digital pound, Mutton revealed a clear disagreement among technologists regarding the choice of the ledger for the CBDC. As a result, the BoE plans to conduct trials with multiple ledger technologies, including blockchain.

The concept of a digital pound, known as "Britcoin," was first introduced when the UK Treasury Department and the BoE formed a joint task force in April 2021 to explore the idea of a UK CBDC. In February 2023, the BoE released a consultation paper outlining the design framework for the digital pound.

The BoE and the Treasury seek feedback from stakeholders and technology experts on the proposed CBDC design, with the feedback period open until June 30.

Addressing the privacy aspect of the CBDC, Mutton confirmed that user privacy would be a key focus, with no collection of personal data by the BoE. The bank's role will be to provide the necessary infrastructure, while private players will drive innovation. Transaction data will be known to the BoE, but no individual-specific information will be accessible. On the other hand, wallet providers may have access to user data but will require explicit user consent to store transaction data.

The BoE and the government intend to uphold user privacy, ensuring neither entity can access user data. Furthermore, the bank has previously expressed its openness to the coexistence of the digital pound and private stablecoins, with a particular focus on retail applications.

As the design of the CBDC continues to evolve, the BoE's emphasis on privacy and exploration of alternative ledger technologies demonstrate its commitment to developing a secure and user-centric digital currency for the UK.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash