Bank of England Says ‘Britcoin’ CBDC Might Not Be on a Blockchain

The man in charge of the UK’s effort to explore a central bank digital currency (CBDC) isn’t sure whether a digital pound would actually leverage blockchain technology.

Tom Mutton, the Bank of England’s director of fintech, told Bloomberg News on the Merryn Talks Money podcast there was notable conflict at a recent meeting focussed on the tech, where people gathered to discuss how UK central bank’s so-called “Britcoin” could be designed.

“None of them agreed with each other at any point,” he said, adding that forum members “were not convinced that distributed ledgers offered more efficiency over conventional ledgers.”

Countries worldwide are increasingly looking at CBDCs as an alternative to cash and traditional payment structures. And the BoE is one of many central banks currently researching the tech and exploring how it could be implemented.

CBDCs bear some similarities to stablecoins, as both are digital tokens pegged to the price of a sovereign currency. But typically, CBDCs are maintained by their respective governments instead of being issued by private companies on public networks, such as Ethereum.

For Britcoin, whether it’s built on a public or private network, appears to be an open question.

Mutton said that the BoE would want Britcoin to be compatible with “distributed-ledger business models in the private sector” if it’s ultimately introduced, yet the digital pound’s underlying structure is still “very much open.”

The ambiguity surrounding Britcoin comes two years after the central bank launched a task force to study CBDCs with the HM Treasury. Mutton signaled that the introduction of a UK CBDC, if it’s agreed upon, is still years away.

The BoE plans to trial several types of ledgers for Britcoin, including some that operate on public networks, according to Bloomberg News. 

At a CBDC Technology Forum meeting in March—which was attended by members of firms such as Amazon, IBM, JP Morgan, and Barclays—members supported the creation of sub-groups that could explore various architectures for Britcoin, according to minutes posted by the BoE.

Members of the forum also discussed the notion of interoperability, and whether the digital pounds architecture should be able to accommodate systems like other CBDCs or bank accounts. During the meeting, the BoE said more concrete details would be laid out in Britcoin’s design phase.

A project backed by the BoE recently found that a digital pound could have robust use cases if it was accompanied by a well-designed API. It could give businesses and consumers the ability to automate payments with “programmability” features, researchers said.

Britcoin’s future has yet to be determined and the UK’s central bank is still far from ironing out the details. The BoE said its future work on Britcoin will be informed by responses it receives to a Consultation Paper during a window set to close on June 30.