A joint experiment by the BIS Innovation Hub London Centre and the Bank of England, known as Project Rosalind, has successfully showcased the viability of a well-designed API layer in facilitating diverse use cases for central bank digital currencies (CBDCs).
Through the initiative, 33 API functionalities were developed, and over 30 retail CBDC use cases were explored. These encompassed various domains such as peer-to-peer transfers, retail payments for goods and services, and small-value business transactions.
The project extensively tested different payment options, including online and in-store retail CBDC payments, offline transactions using near-field communication, and interactions with point-of-sale, QR codes, mobile phones, smartcards, biometric devices, and smart assistants.
Programmability in the private sector and micropayments were also part of the investigation.
With a focus on connecting central bank and private sector infrastructures, the project aimed to develop a universal and extensible API layer to facilitate CBDC payments and promote innovation.
The framework was based on a two-tier CBDC model, where the central bank issues the digital currency and provides the underlying ledger infrastructure while the private sector offers user-facing services.
Project Rosalind provided valuable insights into key aspects of a retail CBDC system, including API design, privacy models, security, standards, offline payments, private sector programmability, and ecosystem roles and responsibilities.
This successful experiment signifies an important step forward in the development of CBDCs, demonstrating the potential of an API layer to support a wide range of CBDC applications and foster collaboration between central banks and the private sector.