Project New Era is a privately led initiative evaluating the path towards a retail Central Bank Digital Currency (CBDC) in the UK. The project proposes closer public-private collaboration in order to address key challenges and open questions relating to CBDC development.
The project commences with a Green Paper, co-developed by business leaders from across the financial ecosystem. The paper examines the case for retail CBDCs, details core design considerations, and proposes a roadmap for collective, public-private experimentation. The paper is a call to action for industry stakeholders including businesses, central banks, regulators, government officials and researchers.
Definitions of core concepts and financial instruments vary significantly across existing CBDC literature. This paper attempts to standardise terminology, but recognises the diversity of perspectives that exist. For avoidance of doubt, the paper solely considers the development of a CBDC ecosystem, and does not focus on cryptocurrencies. In this paper, a retail CBDC refers to a digitised form of M01 money, coexisting alongside cash and issued by a central bank as a direct liability for general purpose, domestic circulation. We also raise the potential for CBDC to form a new monetary category beyond M0 money, including as an on-balance sheet commercial bank liability to mitigate any potential bank disintermediation.
The paper first analyses recent dynamics in the payments industry and the emergence of privately issued digital currencies, determining that market trends and existing payment inefficiencies are creating a platform for change.
Project New Era will form the Digital Financial Market Infrastructure (FMI) Consortium, with the aim of keeping central banks, regulators, and government informed of progress.
The consortium will issue dSterling, a digital settlement asset similar to a CBDC, to drive the pilot, which will focus on core design issues.
