Trust Is The Biggest Hurdle for Any Potential CBDC – Bank of England Financial Policy Committee Official

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According to Carolyn Wilkins, an external member of the Bank of England’s Financial Policy Committee, the three main design principles for a Central Bank Digital Currency (CBDC) are staying focused on core public policy objectives, identifying and mitigating financial stability risks and setting high standards for technology.

Wilkins said that trust is likely the biggest hurdle a CBDC would need to overcome. She made these personal remarks during the Official Monetary and Financial Institutions Forum (OMFIF) global annual Digital Monetary Institute symposium held on 10-11 May 2023 in London.

Wilkins said that despite moving to the next stage of preparatory design work, His Majesty’s Treasury (HMT) and the Bank of England are proceeding carefully and currently consulting widely on their work; hence a final decision has not been taken on whether to issue a digital pound.

Wilkins cautioned governments and central banks to remain focused on the core public policy objectives of a CBDC. She said that before any decision to launch a CBDC, the CBDC policy and design should mitigate financial stability risks. A high bar must be set to avoid reputational implications in case of any flows regarding the technology.

Wilkins further said that during their technical design phase, several central banks had chosen a “platform” or “two-tiered” distribution model as the basis for their development work. The two-tier model involves the central bank being at the foundation of the retail CBDC system and the private sector carrying out customer-facing activities like Know Your Customer (KYC), Anti-Money Laundering (AML), and Combating the Financing of Terrorism (CFT) checks.


In the conceptual model proposed in the UK, the Bank of England would build a “core ledger” to provide the minimum necessary functionality and would also provide an application programming interface (API). Regulated private firms would provide customer-facing services.

Wilkins said that there are several other ongoing projects to explore CBDC design and use cases. She welcomed the efforts in developing the technologies underpinning digital money and said that the challenges encountered would help build expertise within the private sector. 

An example is Project Rosalind, a collaboration with the Bank of England that aims to develop prototypes for an application programming interface to distribute retail CBDC. In February 2023, Project Rosalind demonstrated a set of API functionalities that could enable close collaboration between the public and the private sector in developing a retail CBDC system and supporting a robust ecosystem to spur innovation.