UK kicks off consultation on digital pound

finextra.com:

Bank of England governor Andrew Bailey says: “As the world around us and the way we pay for things becomes more digitalised, the case for a digital pound in the future continues to grow. A digital pound would provide a new way to pay, help businesses, maintain trust in money and better protect financial stability.“However, there are a number of implications which our technical work will need to carefully consider.

This consultation and the further work the Bank will now do will be the foundation for what would be a profound decision for the country on the way we use money.”The technical paper sets out limits on individual holdings to prevent a run on commercial banks and dismisses blockchain as a viable technological option."We judge that a limit of between £10,000 and £20,000 per individual is likely to strike an appropriate balance between managing risks and supporting wide usability of the digital pound," states the paper.On blockchain, the paper suggest that such a solution would present privacy, scalability and security challenges, adding: "Centrally governed, distributed database technologies might achieve the ledger requirements without such limitations. Therefore, these technologies might be appropriate for the core ledger design."The central bank in December sought applications for a five month project to build a prototype wallet for a future digital pound.

Key deliverables cited include the development of a mobile wallet app, wallet and merchant website and a back-end server to serve mobile app and website, call the core ledger API and store user data and transaction history.Key to the process will be ensuring trust in the minds of consumers by embedding strict standards for privacy and data protection. “Like