- Tom Mutton, director of fintech at the Bank of England (BoE), reveals the potential design of the CBDC might prioritize privacy and could bypass blockchain as its foundational technology.
- The BoE is currently seeking feedback on the proposed CBDC design, with the discussion remaining open until June 30.
The Bank of England (BoE) has been advancing steadily on its Central Bank Digital Currency (CBDC) initiative. A recent divulgence from Tom Mutton, the bank’s fintech director, has put a spotlight on the privacy consideration of the CBDC and the exploration of technology alternatives to blockchain as the core technology.
During an interview, Mutton illustrated a recent technologists’ assembly hosted by the BoE to deliberate on the design of the digital pound. A significant point of contention arose regarding the choice of ledger for the CBDC, leading the bank to contemplate testing a variety of ledger technologies, including blockchain.
The concept of the digital pound, colloquially known as Britcoin, was initially introduced when the United Kingdom’s Treasury Department and the BoE set up a joint task force to probe the potential of a UK CBDC in April 2021. The design of the digital pound was further outlined in a consultancy paper published by the bank in February 2023.
At present, the BoE and His Majesty’s Treasury are inviting feedback from stakeholders and technology experts on the proposed CBDC design, with the deadline set for June 30.
Mutton clarified that while the bank aims to align with distributed-ledger business models in the private sector, it remains uncertain whether distributed ledgers offer enhanced efficiency compared to traditional ledgers. Despite reaching out, the BoE did not comment on which alternative ledger technologies it might be considering.
Shifting focus to the privacy aspect of the CBDC, Mutton emphasized the bank’s commitment to offering user privacy, assuring that personal data would not be collected. The BoE’s role, as he outlined, would be to establish the infrastructure, leaving the innovation to private sector players.
Elaborating further, Mutton stated,
“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.”
Assuring that neither the BoE nor the government would have access to user data, he clarified that even wallet providers, with minimal access, would require explicit user consent for data storage. In earlier statements, with its emphasis on the retail sector, the BoE has indicated the possibility of the digital pound co-existing with private stablecoins.