Bank of England Discussion Paper on Approach to Innovation in Money and Payments

The Bank of England has published a discussion paper on its proposed approach to innovation in money and payments. It explains that innovations in money and payments present risks and opportunities for central banks' monetary and financial stability objective and that central banks must be quick to engage with them and prepare for their implications. The BoE's proposed approach includes developing additional functionalities for the Real-Time Gross Settlement service such as extending settlement hours and a synchronization interface that would allow RTGS to connect to external ledgers, including those based on programmable platforms, and settle assets in central bank money.

Central bank money could interact with programmable platforms through the use of so-called "wholesale central bank digital currency" (wCBDC) technologies. To inform this work, the BoE proposes a program of experiments to test the use cases, functionalities and prospective designs of both wCBDC and synchronization, and their relative merits. The BoE seeks views on its overall approach and on specific topics including, the benefits and risks of programmable platforms and the likelihood of them being taken up at scale by wholesale markets; the pace of innovation in private money, particularly commercial bank money; and the use of tokenized deposits and stablecoins for wholesale transactions.

Responses to the BoE's proposed approach may be submitted until October 31, 2024.

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