The head of digital pound project at the Bank of England (BoE) has said that it is “progressing at full steam” on the design of its central bank digital currency (CBDC).

Speaking at Money 2020 in Amsterdam on Wednesday, Diana Carrasco Vime said that the central bank is now halfway through the design stage of its digital pound proposal.

The digital pound would be a digital form of cash issued directly by the central bank, with users able to hold their digital pounds in a digital wallet.

When asked about privacy concerns, Vime assured the audience that this has been a key consideration since the beginning of development and a “stepping stone of the design”, adding that the BoE or government will never have access to personal data.

She explained that the central bank won’t provide a digital wallet, instead this will be handled by intermediaries.

“We will make sure this happens with functional design, tech controls and legislation,” continued Vime.

She told the audience that the central bank will provide a core ledger, with propositions for consumers and businesses to commercialise.

The head of digital pound project added that it would be available to anyone in the private industry that wants to build a proposition using the tech available.

“We can’t think of all the use cases,” she said. “A lot of them haven’t been thought of yet.”

However, the BoE executive gave an example of an opportunity for a women’s domestic violence charity to support non-traceable digital payments for survivors.

She also said that applications for its recently launched Digital Pound Lab, an experimental platform enabling hands-on experimentation for industry and the Bank, are now in the initial phase, with everything discovered in the Lab being applied to the design.

Applications are open to all private and public sector companies and organisations from technology, payments, banking, retail and other relevant sectors that are interested in hands-on experimentation with digital pound use cases.

Vime said that working with the private industry as part of this scheme will help the bank identify what the use cases are and how to make sure that the design offers these possibilities if the digital pound gets the go-ahead.

She revealed that the Bank is testing a number of use cases across different merchant types, including payment on delivery.

Vime also explained that because the UK relies heavily on SMEs there has also been a focus on understanding what smaller merchants need to accept digital payments so that they could potentially have an alternative method of payment.

Unlike the digital euro, she explained, there are no plans to enforce acceptance by UK merchants.

The design phase completion is set for 2025-2026, at which point the Bank will put together a blueprint for the digital pound. This will be followed by an assessment of the blueprint and policy case to see whether it meets the central bank's objectives, which will ultimately guide what happens next with the digital pound.

Vime revealed that the next update regarding the digital pound will be published in July.

Looking ahead to a future decision on the digital pound, she said that the BoE doesn't yet know if society needs a CBDC, explaining that at this stage it is still deciding whether it is necessary.

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