A joint initiative between the BIS Innovation Hub in London, the Bank of England (BoE) and Quant Network, opens the door to using application programming interfaces (APIs) for central bank digital currency (CBDC) systems.

The Rosalind Project, led by the BIS Innovation Hub and the Bank of England (BoE), has been exploring how to adapt application programming interfaces (APIs) for central bank digital currency (CBDC) systems. The project aimed to develop API prototypes to investigate how retail payments could be facilitated, maximising interoperability between the public and private sectors, in a way that would encourage the adoption of these digital currencies.

The initiative has also served to demonstrate that APIs will play a key role in enabling CBDC systems to offer a range of benefits in terms of payment functionality and security, as well as to explore how best to lay the foundations for building a robust and practical ecosystem. In this regard, 33 API functionalities have been developed and more than 30 retail CBDC use cases have been implemented.

While some of these functionalities are already possible with payment systems such as cards and cash, the Rosalind Project has focused on the potential “programmability” of digital currencies, establishing similar features to smart contracts stored on a blockchain.

Collaboration with Quant Network

Quant Network is a blockchain technology company that seeks to achieve universal interoperability between blockchains using its Overledger US operating system. That is, to allow Overledger users to interact with different blockchains simultaneously.

With its participation in the Rosalind Project, Quant Network has provided the underlying infrastructure, blockchain platform, smart contracts and interoperability between central bank ledgers. In short, a central bank-scale key management solution for blockchain transactions.

In addition, the Quant Network has a cryptocurrency (QNT) within the Ethereum blockchain, which is used to power Overledger and can be bought and sold from major cryptocurrency exchange platforms, such as Bitvavo which 11Onze Recommends.

One step closer to “Britcoin”?

With the participation of the Bank of Canada, Barclays Bank, Amazon and Mastercard, the Rosalind Project has focused on the possible introduction of a UK central bank CBDC. In this regard, the project has reignited the controversy over CBDCs following the public rejection of Prime Minister Rishi Sunak’s plans to introduce “Britcoin” as a virtual alternative to cash, and statements by Sir Jon Cunliffe, Governor of the Bank of England, that the creation of a UK central bank digital currency “is more likely than not”.

A government working group has been looking into the possibility of creating a digital currency that could be used alongside cash and cards for everyday transactions to digitise the economy. The Treasury and the Bank of England were thus examining the feasibility of a “digital pound” for businesses and individuals to boost innovation in the UK’s financial sector after Brexit.

The Rosalind Project’s final report that a CBDC could make payments between individuals cheaper and more efficient while allowing businesses to create new financial products aimed at reducing fraudulent financial activity, could be seen as a further step towards the launch of the “Britcoin”.

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